A subordinate loan is a type of loan that is ranked lower in priority than another loan. This means that if the borrower defaults on their loans and the property is foreclosed, the lender of the subordinate loan will not be paid back until all other loans have been paid. The most common type of subordinate loan is a second mortgage or a home equity loan, which is a loan that is taken out using the borrower's equity in the property as collateral. Subordinate loans are also known as junior loans or secondary financing.
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What does subordinate loan mean?
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