2nd Mortgage
A secured loan is one that is secured against some asset like jewelers, property, share certificates, etc. A second mortgage is a second secured loan that is taken on the same asset. In simpler terms, this will be subordinate to a loan that is already taken against the same asset. This especially happens in real estate.
One single property can have multiple loans taken on it. The loan that is first registered with the registrar of the county is known as the first mortgage or first position trust deed. The next registered lien is known as the second mortgage. There are also a few rare cases of third mortgage or fourth mortgage. But, this is highly rare as this kind of lending is very risky for the lenders. This is because if there is a default on the loan, it is the first mortgage that will get paid off first. The successive mortgages appear successive in line as per their number.
There have been cases where the second lien has actually led to the sale of the asset. When there is constant default on the second loan, the lender may acquire the first mortgage too, which may be in good standing. Then, he may sell the asset and realize the loan.
Any person who seeks a second mortgage will have to provide the following details. Only then he will be able to avail the loan.
1) High credit score
2) A good amount of equity in the first mortgage
3) History of employments held and holding
4) Low debt to income ratio
Therefore, it is always better not to get too many borrowings to your name. Check your financial position and the urgency of your need before you borrow any money.