Second mortgages are loans that home owners may take which are secured against their homes. They are called second loans as they are second in importance to the mortgage that financed the purchase of the home. The interest rate is higher on the second loan than on the first. Should the home owner not pay off the loan in full and the lender could foreclose the loan and sell the home to regain his capital. The first loan would be paid off first and the money that remained would be used to pay off the second one.

A second loan is usually taken to pay for the deposit on the home if the buyer does not have ready cash to pay for it. Maybe the home owner did have a cash deposit but preferred to keep it to furnish the home or buy a car. Either way the home owner is at liberty to take a loan to pay for the down payment.

This loan can provide home improvements for the home owner. Home improvements can become very expensive and with the help of a loan a lot can be done to make the home more comfortable for the family and also keep up the value of the home.

This loan can provide college or university education for your children. This too, is a great expense for the family budget and can be paid for by the loan.

The loan could be used for debt consolidation if the home owner got him self into debt. The loan would pay for all the debts and leave the borrower with only the loan to pay off.