What is a second mortgage and how does it work

Second mortgages are available in the market for people whose current mortgagee won’t increase the mortgage to enable them to do what they want to do.

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So there are providers of second mortgages. They would generally be at a substantially higher rate than the first mortgage because of the risk to the lender. They sit behind the first mortgage. So if there was an event of a mortgagee sale, for example, a second mortgagee carries a lot more risk and therefore they price their mortgages accordingly, but that can be beneficial for short term, say a 12 month type arrangement.

If someone needs to bridge a gap for business purposes, or even for perhaps for healthcare or something that they need to buy now and can see that they can clear that debt relatively quickly from other sources or even have the loan structured over the short term to clear it and get rid of it. But it’s more expensive and a bit harder to obtain, but they are available for the right people, on the right project.