second mortgage

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A mortgage taken out on a property that is already mortgaged. Second and subsequent mortgages can often be used to raise money if the value of the property has increased considerably since the first mortgage was taken out. As the deeds of the property are usually held by the first mortgagee (lender), the second mortgagee undertakes a greater risk and therefore usually demands a higher rate of interest. The second mortgagee usually registers the second mortgage to protect himself against subsequent mortgages. In the UK, the Land Registry will issue a certificate of second charge in the case of registered land.

Subjects: Financial Institutions and Services.

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