Second mortgage is a secondary loan taken out against a property after the first mortgage is already in place. What a second mortgage does is allow you to use the available equity of your property as financing. It can exist either as a home equity line of credit, or as a private mortgage. Whichever you decide to go with, your home is used as the security but in the event of a default, the first mortgage is always paid first.
There are some advantages to a second mortgage that people may not initially consider. For one, if you choose to get your second mortgage as a home equity line of credit, you will often be able to secure a lower interest rates than unsecured loans or credit cards. This is because the lender is provided some protection by being given a lien on your home.
The money provided by a second mortgage can go towards a variety of improvements on your property, like a new garage, a kitchen remodel or other additions. But your second mortgage doesn’t need to go towards improving your property at all and can also be used to purchase a big ticket item or pay off high interest loans, such as credit cards.
If your considering a second mortgage, it’s important to consider the equity you have achieved in your home. If your property has little to no equity, you are unlikely to be approved for a second mortgage. You should also consider whether the payments of the second mortgage are within your monthly budget. If you find that you cannot pay your second mortgage, you are placing your entire property at risk.
We Group Mortgage Solutions, we understand the risks and advantages to getting a second mortgage and our team of trained and understanding mortgage brokers can provide information on your finances and whether or not a second mortgage would be right for you. We can also help you decide that type of second mortgage would work best for you and work with the lenders to get you the best possible interest rates.