A second mortgage is usually a secured loan using a house as collateral, where the house is already and concurrently used as collateral against a first mortgage. Real estate may bear multiple liens, and the first-recorded lien is the first mortgage or first-position trust deed. The second-recorded lien is the second mortgage. While additional liens are possible they are rare.
If the mortgages default, the first mortgage is treated preferentially and the second mortgage is subordinate, receiving only those funds left over after satisfying the first mortgage. Thus, second mortgages have higher interest rates. Most second mortgages are for a term of twenty years or less, and they are often referred to as a home equity loan (the mortgage is the legal lien instrument while the loan is the financial component).