Subordinate Financing

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Home Real Estate Terms Glossary Subordinate Financing

What is Subordinate Financing?

Subordinate financing is a second mortgage loan on a property that’s not paid off when the first or initial mortgage is refinanced. In most cases, subordinate financing is debt financing, where a debt ranks behind the first secured lender's debt like a first mortgage.

Did you know that nearly all mortgages in the US are secured by the properties or homes for which the lender or bank grants the loans?

Examples of Subordinate Financing

  • Example 1: Asset-backed securities
  • Example 2: Preferred stock

Here’s Investopedia’s definition of Subordinate Financing .

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