Mortgage Types - Second Mortgages

Kelleway Mortgage Architects

A second mortgage is a mortgage granted when there is already a mortgage registered against a property. If the borrower defaults and the property is sold, the second mortgage is paid only after the first has been settled.

In the past, second mortgages were considered for individuals who could not afford an adequate down payment or needed cash in a hurry. However, consultation with a professional financial advisor is recommended prior to taking up this course of action as this may result in a level of indebtness that is difficult to reduce and support. While a borrower may be able to put additional mortgages on their property, with each succeeding mortgage, there is more risk of default involved, which results in the lender charging a higher interest rate.