second mortgage: meaning, definition, pronunciation and examples
C1Formal, Technical, Financial
Quick answer
What does “second mortgage” mean?
A loan taken out using a property that already has a first mortgage as collateral, with the first mortgage taking priority in repayment.
Audio
Pronunciation
Definition
Meaning and Definition
A loan taken out using a property that already has a first mortgage as collateral, with the first mortgage taking priority in repayment.
A subsequent loan secured against the equity in a property, subordinate to the primary mortgage. It is often used to access capital for home improvements, debt consolidation, or major expenses, but carries higher risk and interest rates than a first mortgage.
Dialectal Variation
British vs American Usage
Differences
The term and concept are identical in both varieties. The legal and financial frameworks are very similar.
Connotations
In both regions, it can carry connotations of financial strain, leveraging home equity, or strategic investment.
Frequency
Equally common in formal financial contexts in both the UK and US. The alternative 'home equity loan' is more frequent in everyday American English for a similar product.
Grammar
How to Use “second mortgage” in a Sentence
[Subject] took out a second mortgage on [Property]A second mortgage was secured against [Property] by [Borrower]They used a second mortgage to [Purpose]Vocabulary
Collocations
Examples
Examples of “second mortgage” in a Sentence
verb
British English
- They decided to second-mortgage their flat to raise the capital.
- The bank advised against second-mortgaging the property.
American English
- He second-mortgaged his house to start the business.
- Second-mortgaging your home is a significant financial risk.
adverb
British English
- [Not standard usage]
American English
- [Not standard usage]
adjective
British English
- They explored second-mortgage options with their broker.
- The second-mortgage market tightened after the recession.
American English
- She reviewed several second-mortgage offers.
- Second-mortgage rates are typically higher.
Usage
Meaning in Context
Business
The company's founders took out second mortgages on their homes to fund the startup's initial expansion.
Academic
The 2008 financial crisis saw a sharp increase in defaults on second mortgages, exacerbating the foreclosure wave.
Everyday
They're considering a second mortgage to pay for their daughter's university fees.
Technical
In the event of foreclosure, the proceeds satisfy the first mortgagee in full before any distribution to the second mortgagee.
Vocabulary
Synonyms of “second mortgage”
Strong
Neutral
Weak
Vocabulary
Antonyms of “second mortgage”
Watch out
Common Mistakes When Using “second mortgage”
- Using 'second mortgage' to refer to a mortgage on a second home (that's a 'mortgage on a second home').
- Incorrect: 'We got a second mortgage for our holiday cottage.' Correct: 'We got a mortgage for our second home.'
FAQ
Frequently Asked Questions
A home equity loan is a common type of second mortgage, but 'second mortgage' is the broader legal category. All home equity loans are second mortgages, but not all second mortgages are structured as simple home equity loans (some may be lines of credit).
It is possible but significantly more difficult. Lenders view it as higher risk, so interest rates will be much higher, and loan-to-value ratios will be lower. Some specialist lenders may offer products.
The proceeds from the sale first pay off the full balance of the first mortgage, including any fees. Only then is the second mortgage paid. If the sale price doesn't cover both, the second mortgage lender may not be fully repaid.
Remortgaging (or refinancing) involves replacing your existing first mortgage with a new one, often to get a better rate. A second mortgage is an additional loan on top of your existing first mortgage; you keep and pay both.
A loan taken out using a property that already has a first mortgage as collateral, with the first mortgage taking priority in repayment.
Second mortgage is usually formal, technical, financial in register.
Second mortgage: in British English it is pronounced /ˌsek.ənd ˈmɔː.ɡɪdʒ/, and in American English it is pronounced /ˌsek.ənd ˈmɔːr.ɡɪdʒ/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “[Not commonly idiomatic. The term is technical.]”
Learning
Memory Aids
Mnemonic
Think of a line at a water fountain: the FIRST mortgage gets a drink first. The SECOND mortgage has to wait its turn. 'Second' means second in line for repayment.
Conceptual Metaphor
FINANCIAL BURDEN IS A LAYERED WEIGHT (a second mortgage is an additional layer of debt secured to the same asset).
Practice
Quiz
What is the key characteristic of a second mortgage?