A junior mortgage, also known as a second mortgage or subordinate mortgage, is a mortgage loan that is subordinate to another loan against the same property. In the event of default and foreclosure, the holder of the junior mortgage is only repaid after the senior mortgage and any other prior liens have been settled.
A subordinated lien created by a mortgage loan over the amount of a first mortgage, often used to reduce the amount of a cash downpayment or to raise cash in refinancing.
An underlying mortgage, also known as a first mortgage, refers to the original mortgage on a property that remains in place when a wraparound mortgage is created.
A wraparound mortgage is a loan arrangement where an existing mortgage is retained, and a new, larger loan is provided. The new lender remits payments on the existing loan and usually experiences a higher yield due to the difference in interest rates between the old and new loans.
