CHINA Everbright Bank has rolled out detailed rules on second mortgages for individuals, making it the first bank in Shanghai to offer a clear definition.

The bank defines second mortgage based on the loan applier's credit history, excluding family members. For instance, if a husband has taken out amortgage without his wife co-signing the loan, the wife can still applied for a new home loan as her first mortgage, meaning she can skip penalties imposed by the government on second-mortgage holders, the bank said today.

However, even if home buyers have paid all the money back for their previous home loan, their second property home loan will still be considered a second mortgage, the bank said.

A September 27 rule from the People's Bank of China and the China Banking Regulatory Commission requires mortgage holders who apply for another home loan to produce a down payment of at least 40 percent and pay a 10 percent premium on their interest rate. For people seeking a third or fourth mortgage, the down payment requirement and interest rate should be even much higher, with specific figures determined by commercial banks.

Industry insiders noted, however, that the rule didn't clearly define what is a second mortgage.

Everbright Bank is demanding a down payment of at least 40 percent and at least 10 percent interest premium on a second mortgage.

The Beijing-based bank also requires another two percentage points on interest rates and down payment for each additional mortgage taken out.