What is a second mortgage?

A second mortgage refers to an additional loan that is taken out on a property that already has an existing first mortgage. This additional loan is subordinate to the first mortgage, meaning that in the event of a foreclosure, the first mortgage lender will be paid off before the second mortgage lender. Essentially, the first mortgage takes priority over the second in terms of repayment and claims against the property.

Second mortgages can be useful for homeowners who need extra funds, as they allow the borrower to tap into the equity accumulated in their home. It is important to note that, because the second mortgage is subordinate, it often carries a higher interest rate compared to the first mortgage due to the increased risk to lenders.

The other options describe concepts that do not accurately reflect what a second mortgage is. A primary loan against a property and a mortgage with no associated interest do not capture the essence of a second mortgage. Similarly, a loan secured only by a borrower's income does not align with the typical structure of mortgages, which are secured by real property.