senior mortgage definition · LSData (2024)

FAQs

What is a senior mortgage loan? ›

Senior loans (or “senior mortgages” or “first mortgage” or “first-lien” debt holders) are in first position (i.e. they have a first-lien priority). Junior loans (or “junior mortgages” or “second-lien” debt holders or mezzanine capital) have a lower priority than a first or prior (senior) lender.

A junior mortgage refers to a second mortgage that is granted in conjunction with the approval of an effective primary or prior mortgage. The primary mortgage is referred to as a senior mortgage. A junior mortgage can also be a third, fourth, or fifth mortgage granted after the security of a senior mortgage.

Mortgages are loans that are used to buy homes and other types of real estate. The property itself serves as collateral for the loan. Mortgages are available in a variety of types, including fixed-rate and adjustable-rate.

What Is a Mortgagee? A mortgagee is a lender: specifically, an entity that lends money to a borrower for the purpose of purchasing real estate. In a mortgage transaction, the lender serves as the mortgagee and the borrower is known as the mortgagor.

For instance, a company looking to acquire another for $50 million may receive a senior loan for only $40 million from its primary lender. Rather than put up $10 million of its own capital or bet on equity, the business owner can apply for a senior subordinated loan from an alternative lender to make up the difference.

The most common types of senior debt are Senior Term Debt and Revolving Credit Facility.

A senior bank loan is a debt financing obligation issued to a company by a bank or similar financial institution and then repackaged and sold to investors. The repackaged debt obligation consists of multiple loans. Senior bank loans hold legal claim to the borrower's assets above all other debt obligations.

Key Takeaways. Junior debt refers to bonds or other debts that have been issued with lower priority than senior debt. Also known as subordinated debt, junior debt will only be repaid in the event of default or bankruptcy after more senior debts have been first repaid in full.

In finance, senior debt is debt that takes priority over other unsecured or otherwise more "junior" debt owed by an issuer. Senior debt is frequently issued in the form of senior notes or referred to as senior loans. Senior debt has greater seniority in the issuer's capital structure than subordinated debt.

A mortgage is an agreement between you and a lender that gives the lender the right to take your property if you fail to repay the money you've borrowed plus interest.

What is the difference between a mortgage and a loan? ›

A loan refers to any type of debt and is a sum of money that is borrowed and then repaid over time, typically with interest. In contrast, a mortgage is a loan used to purchase property or land.

A first mortgage is a primary lien on a property. 1 As the primary loan that pays for a property, it has priority over all other liens or claims on a property in the event of default. A first mortgage is not the mortgage on a borrower's first home; it is the original mortgage taken on any one property.

What is the mortgagee clause? The mortgagee clause shows that your mortgage lender is protected under the policy which is required by your mortgage agreement. If the mortgagee clause on your insurance policy is not correct, please contact your insurance agent to make the correction and issue a change to us.

(a) A mortgage broker providing mortgage brokerage services to a borrower is the fiduciary of the borrower, and any violation of the broker's fiduciary duties shall be a violation of the mortgage broker's license law.

The mortgagor is the borrower of the loan. If you're receiving the loan to buy a home, you're the mortgagor. The mortgagee is the lender — a bank, credit union or online lender, typically. This is the entity providing the funds via a mortgage to buy a home.

Benefits of a Senior Secured Loan

For investors, senior debt can be attractive because income payments rise as interest rates rise. That can provide investors with a hedge against inflation. In addition, senior secured loans typically experience low default rates because collateral backs them.

A reverse mortgage is designed to allow seniors to access the equity in their home as cash paid by the lender. With this option, you can receive the funds in a lump sum or opt for monthly payments over a term or as long as you live in the home.

Absolutely. The Equal Credit Opportunity Act's protections extend to your mortgage term. Mortgage lenders can't deny you a specific loan term on the basis of age.

Senior bank loans are also referred to as syndicated bank loans, as a number of them are usually packaged together, and the packaged debt obligation is then sold to investors. The loans are designated as “senior” because they take priority over any other potential debt obligations by the borrower.