Glossary
First mortgage
Also called: first registered mortgage, senior mortgage
A first mortgage is a mortgage registered on a property's title that ranks ahead of every other mortgage. If the property is sold to repay debt, the first mortgagee is paid before any later-ranking lender, after the costs of sale and certain statutory charges.
An example
An investor borrows from a private lender to buy a vacant site with no existing debt. The lender registers its mortgage on the title at settlement. Because no other mortgage is registered, it holds first ranking.
Why it matters
Ranking determines who is repaid first, so first mortgage loans are generally seen as lower risk for the lender than loans that rank behind another. That usually shows up in the price and the amount a lender will advance. A first mortgagee's consent is often needed before any other lender can register behind it.
Points to check
If you already have a first mortgage and want further funding, ask whether the existing lender's documents restrict further security. When refinancing, check how the payout figure is calculated and whether any break or discharge fees apply. Confirm the new lender will hold first ranking once the old mortgage is discharged.
Read about first mortgage private loans