What is a Junior Mortgage?

Introduction A junior mortgage is a loan that is second priority for lean considerations than an earlier loan. A junior mortgage is also called a second mortgage. As the name suggests, the second mortgage is sanctioned after the first loan has been issued. Just like the first mortgage, the value of the home/property becomes the collateral for the junior mortgage. However the junior mortgage is less important that the first loan. Junior mortgages generally come with higher interest rates and shorter loan tenures than the primary mortgage. This amounts to higher amounts of money going out as monthly installments. The overall cost of the loan is also higher. However junior mortgages are still less costly than unsecured loans. Why Junior Mortgage A junior mortgage helps to have additional down payment or closing cost money. When this is the purpose, the junior mortgage is sanctioned more or less at the same time as the primary mortgage. This is not a desirable situation for some lenders, ...  more

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A junior mortgage, also called a second mortgage, is a type of loan that is lower in lien priority than a prior loan or lien. This second mortgage is granted after a primary mortgage loan has been approved. Since a junior mortgage is recorded after the initial loan, it is considered inferior to the first loan. Like a first mortgage loan, a junior mortgage is secured using the value of the home as collateral. Many borrowers seek to secure junior mortgages for the purpose of obtaining additional down payment or closing cost money. In this situation, the junior mortgage is granted at nearly the same time as the primary mortgage. Some lenders prefer to avoid granting this type of junior mortgage because the borrower typically has little or no equity in the home. However, other lenders are willing to grant junior mortgages in such cases, especially when the borrower has very good credit or meets other criteria. Another reason a borrower might seek a junior mortgage is to gain access to ...  more