What does Second Mortgage mean?

A second mortgage implies making an additional loan which is also secured against your property. Supposing you already have a “first mortgage”, still, you are eligible to take out another loan based on the equity left in your home (real market value of the property minus outstanding loans will show you how much equity you have left).

Certainly taking out a second mortgage will put another heavy burden above your head, so unless it is an emergency, it is not advisable to contract yet another debt. Plus, most of the lenders will not offer you too good terms for a second mortgage, because you already are a high risk customer. He will become only second in charge of recovering his money in case you default on your payment; this is why you are considered a high risk client.

Expect that you will have to pay pretty higher interest rates as compared to your first mortgage terms, plus taking out a second mortgage also means using up almost all your existent resources, because after it there will be very little/ non-existent equity left or you may even end up in negative equity which you do not want.