Mortgage Glossary

Second Mortgage

Any additional mortgage legally registered against a property that already has a mortgage.
For example: a second mortgage, a third mortgage, etc...

A 'first' mortgage will normally have a better interest rate than any subsequent mortgages. This is because the 'first' lender has first claim on any funds that are recovered from a sale or a foreclosure.

A 'second' mortgage is literally a mortgage registered, by date and time, after the first one. Usually the interest rate is higher as there would be fewer dollars available after the holder of the first mortgage has been repaid. The rate is higher because of the extra risk the second lender incurs.

It is NOT the date and time that money is lent, but the date and time the mortgage document is registered at land titles office, that legally indicates which lender will have a 'first' mortgage.

If a lender proceeds with a foreclosure, the first mortgagee gets paid first, and if anything is left from the sale, the second (& third etc.) mortgagees receive their money.

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