A wraparound mortgage is a level of financial debt created against an asset (such as a property) that is currently mortgaged.

The existing, or 'in-place' mortgage maintains it's original priority and is neither cancelled nor extinguished by the wrap-around mortgage.

Normally the value of a wraparound mortgage is equivalent to the outstanding balance of the existing mortgage plus any funds the vendor financier has lent to the borrower (purchaser).

A wraparound mortgage is normally arranged so that the payment required to cover the principal and interest obligations of the wraparound mortgage are sufficient

to assume (that is, take over) the principal and interest requirements of the existing mortgage along with any costs or profits the vendor financier (wrapper) loads into the repayment figure.

With such an agreement in place the borrower (purchaser) agrees to make payments to the wrapper that are sufficient to cover that wrapper’s cost of servicing the existing mortgage, plus the new advance. In turn, the wrapper undertakes to make all payments to the first or in-place mortgagee.

A wraparound mortgage is a term sometimes associated with vendor financing and is sometimes used to described an instalment contract.