if I purchase property through my bank, and then get a personal loan to do more work on that property, will that personal loan be considered...

Question

if I purchase property through my bank, and then get a personal loan to do more work on that property, will that personal loan be considered a second mortgage?

Answer

The answer to your question really relies upon the purpose for the distinction. There are very few mortgages in Missouri. Most folks execute a Deed of Trust when borrowing money to purchase a house in Missouri. But, when they say "mortgage" many people lump in all loan arrangements for the purchase of a house or condo. Perhaps, you are asking if when I try to refinance or sell my home, will creditors look at this second loan as encumbering my property, like the original loan?

If the second loan is secured by the property, I suppose you could refer to it as a mortgage, in that there may be some right to foreclose. If the second loan is from the same bank as the first, the loan documents for the first loan probably say that the security (lien on property) extends to cover any subsequent loans from that lender. Most major banks include that language in their loan documents.

Even without a direct tie to the property. the second loan, if purposed for the improvement of real property, may trigger a right for a mechanic's lien for the lender. That is that they can foreclose the house to pay the debt, because it was used to purchase ,materials and labor to repair or increase the value of the house.