What is a Second Mortgage?

Learn more about second mortgage loans and rates

A second mortgage is the second loan taken out on a property. It is also commonly referred to as a home equity loan or line of credit. To be technical, the term 'second mortgage' refers to the actual lien on the property while home equity loan is a reference to the resulting debt. (A home equity line of credit is also a second lien on a property and gives you access to a revolving line of credit as opposed to a lump sum loan.)


You can take out a second mortgage loan after you've built equity in your home by paying down some of the principal on your first, or primary, loan. Common reasons to apply for a second mortgage include large expenses like medical bills, tuition, home remodeling, debt consolidation, and purchases like cars.


Your first mortgage is referred to as the primary mortgage because it will always take preference. In other words, if you were to default on your home loan, you would have to pay off the first mortgage first.

A guide to second mortgage rates

When you apply for a second mortgage, you'll likely find that interest rates are higher than they are on your primary mortgage. This is because your loan is based on the same collateral - your house - as your primary loan. Since this represents more risk to lenders, they will generally charge higher interest on a second mortgage. This interest rate is generally more competitive than other forms of credit like personal loans and credit cards.

Compare your options: Refinance or take a second mortgage

If you're looking to borrow against your home, you do have the choice between a home loan refinance and a second mortgage home equity loan or line of credit. Both will allow you to tap the equity in your home. In a refinance, you pay off your current mortgage and can take out a new, primary mortgage that includes not only the remaining balance of the original mortgage but also extra funds, which you receive in a lump sum. Some homeowners may choose to refinance when interest rates are low and a primary mortgage would be considerably less expensive than a second mortgage. However, this works best when you've accrued substantial equity in the property. Also, bear in mind that you'll pay closing costs on a refinance but not on a second mortgage.

Explore your first and second mortgage options with Citizens Bank

Whether you're in the market for a first or second mortgage, Citizens Bank can help. Speak with one of our home loan advisors at 1-888-514-2300 or learn more about first mortgages and home equity loans and lines of credit options online.