A second mortgage is a loan taken out against a property that already has a primary mortgage. It uses the home as collateral, just like the first mortgage, but it is subordinate to the first mortgage, meaning the first mortgage lender gets paid first if the borrower defaults and the property is sold

. Key points about a second mortgage:

• It allows homeowners to borrow against the equity they have built up in their home, which is the difference between the home's current market value and the remaining balance on the first mortgage

• Common types of second mortgages include home equity loans and home equity lines of credit (HELOCs)

• Second mortgages typically have higher interest rates than first mortgages because they are riskier for lenders, but their rates are usually lower than those of credit cards or personal loans

• Borrowers must have sufficient equity in their home and a good credit score to qualify

• The loan amount is usually given as a lump sum or as a credit line, and it must be repaid alongside the first mortgage, resulting in two separate payments

• Second mortgages are often used to consolidate debt, finance major expenses like home renovations or education, or purchase a second property

Because the second mortgage is junior to the first, if the borrower cannot repay, the first mortgage lender has priority in foreclosure proceedings, which increases the risk and cost of the second mortgage

. In summary, a second mortgage is an additional loan secured by your home that lets you borrow against your home equity while you still have a primary mortgage, but it comes with higher risk and costs due to its subordinate position.