Junior Mortgage

Mortgage that is subordinate to earlier mortgages, for example, a second mortgage if there is an outstanding first mortgage. If the borrower defaults, holders of junior mortgages will be paid only after prior lien holders have been satisfied.

A Mortgage whose claim against the property will be satisfied only after prior mortgages have been repaid. See First Mortgage, Second Mortgage.
Example: Property is purchased for $100,000. A first mortgage is obtained covering $75,000 of the price. To reduce the cash requirements, a junior mortgage is arranged to cover $15,000 of the price. The remaining $10,000 is cash Equity.

One in which the lender’s claim against the owner is subordinate to that of a first mortgage holder or another claim which has priority.