What defines a second mortgage?

A second mortgage is defined as an additional loan secured against a property that already has an existing primary mortgage. This definition captures the essence of what a second mortgage entails—essentially, it's a way for homeowners to leverage the equity in their property.

In practical terms, when a homeowner has built up equity through payments on their primary mortgage, they can take out a second mortgage to access that equity, which can be used for various purposes, such as home improvements, debt consolidation, or other financial needs.

Having a second mortgage means that the lender of this loan will take a subordinate position to the primary mortgage lender, meaning that in the case of foreclosure, the primary lender would be paid off before the second mortgage holder. This subordination typically carries a higher risk for the second lender, which can often result in a higher interest rate compared to the primary mortgage.