Glossary

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Subordinate Loan
A subordinate loan is also known as a second mortgage, but a subordinate loan can also be a third mortgage. These loans are separate from the original mortgage that borrowers applied for and were granted in order to purchase the house. After a period of time elapses and they develop equity in the house, homeowners can apply for a subordinate loan. The equity in the house is the difference between what people owe on their original mortgages and the house's current market value. If homeowners have enough equity in the house, they can qualify to borrow against it. When they do this, they will receive a sum of money that they will repay every month until the loan has been paid in full. A subordinate loan will often have a shorter term length than the original mortgage, and the homeowners may be able to repay these loans within a couple of years.