What is a second mortgage?

A second mortgage is just that – it is the second mortgage registered on title behind a previously registered mortgage. There is no limit to the amount of mortgages a borrower can grant, but lenders are normally only willing to take mortgages where there is sufficient equity in a property to ensure these funds can be repaid should the second lender have to commence foreclosure proceedings. Second mortgages are normally at a higher interest rate than found in a first mortgage, as there is increased risk to the second lender that the borrower may not be able to make payments on both a first and a second mortgage. Second mortgages generally leverage the borrower’s equity in a property, permitting the borrower to extract built up equity in a property without having to repay the first mortgage.

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