Second Mortgages

We create a second mortgage when the borrower offers the property for a second time as security. The first lender still has a mortgage secured on the property. So, the new lender takes a second charge on the property.

The original lender keeps the deeds, and its charge takes precedence over next charges. This means that, if a sale, the original lender’s claim is prioritised (if possible) and, if enough surplus then remains, the second mortgagee’s charge will be met. Lenders will, of course, only offer a second mortgage if there is adequate equity is available. Since second mortgages represent a higher risk to lenders, they are likely to be presented at higher interest rates than first mortgages.