Tacking in lending: Understanding the key concepts

The Principle of Tacking

As an overview, the principle of tacking allows the expected priority of interests to be altered under certain circumstances.¹

This principle enables a secured lender to add further advances that are secured by the existing security while maintaining priority over other subsequent lenders, for example:

• "Lender A" advances funds and registers a first registered mortgage over the security property.
• "Lender B" advances funds and registers a second registered mortgage over the same security property.
• "Lender A" subsequently makes further advances, which are secured against the same property. These further advances can be "tacked" onto the existing first registered mortgage and, therefore, take priority over "Lender B's" second mortgage.