A second mortgage is a loan which home owners may borrow on their homes. It is the second one that is secured against the home. Home owners who choose to have two loans secured against their home are risking their homes as anything could happen to prevent them from being able to pay off the loan in full. This would mean that the bank could foreclose on the loan and the home would be sold to pay off the first mortgage and what money was over would be used to pay off the second loan.
Nevertheless there are people who need the money and make use of the facility to loan money against their homes. In some cases home owners take this loan to pay for the down payment of their homes if they did not have the cash to do so. Many banks do not give home buyers loans to finance the full purchase price of the home, so this is the easiest way to access enough cash for the deposit.
It is not necessary to take the second loan from the same bank or money lender as for the first loan.
If you decided to buy a new car it could work in your favor to take this loan and pay cash for it and then pay off the loan. The interest rate would be higher paying off a car than it would be paying off this second loan. You could save quite a tidy amount in interest rates.
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