Why Should You Take a Second Mortgage?
A Mortgage simply refers to a loan where the collateral is specifically a residential property. A second mortgage is a loan borrowed in spite of an existing ongoing loan against the property. Thus in a second mortgage the risk of the lender is higher than the risk of the first mortgage lender. The first mortgage lender has the initial rights over the property to clear off his share after which the second mortgage lender has a right.
Click here to avail a Loan of 80% of the value of your home
Usually the loan you can avail from a second mortgage is around 80% of the value of home, but it differs from situation to situation. Since the risk of the second mortgage lender is high, the interest rates are also higher than the first mortgage market rates at a particular time. That is why consulting a broker has become very necessary to secure a good deal in the mortgage market. Brokers have no charge for their consultancy, they are simply paid by their network of lenders.
Lump Sum Availed from the Second Mortgage Can be Simply Used for Anything:
Cover the Down payment of Your First Mortgage
A second mortgage can be availed to cover the down payment of the first mortgage only after which you will be able to avail the first mortgage. You can also avoid Private Mortgage Insurance using your second mortgage.
Secure a Better Interest Rate
Being a volatile market, you can avail a second mortgage at a low interest rate and simply pay off your first mortgage with the lump sum received. You can also pay off your high rated debt obligations such as your credit card dues using the second mortgage.
Meet Emergency Financial Obligations
Emergency medical expenses or higher education expenses can easily be covered by a readily available second mortgage. The rates are much lower than other borrowing options in case of a second mortgage.
Move to Another Lender
A lender having better terms and conditions can always be approached and availed by borrowing a second mortgage on your home and using the lump sum to pay off your first lender. You can convert from bank to a private lender or vise versa using a second mortgage.
Interest payments on Second Mortgage are usually tax deductible unlike other interest payments such
as your credit card interest charges.