A second mortgage may or may not be the best option for securing additional funds from the equity in your property.
There are a few different things to consider before committing to an additional mortgage.
Second mortgages will carry higher rates of interest than 1st mortgages and will provide less leverage (total mortgages outstanding divided by total property value).
There are also less options available for second mortgages compared to first mortgages with many lenders not offering them at all.
Too often I see clients, that require additional funds, automatically want a second mortgage when it may not be the best approach to secure the money they need.
So when should you consider a second mortgage?
Second mortgages can be used for anything from home improvements to debt consolidations with the later being the most common during the recent recession.
In the residential mortgage market, private lenders finance a large number of seconds due to the strength of the underlying security and the lack of available bank financing for people with poor to bad credit.
So basically, you should consider a 2nd mortgage in situations where its the best option in terms of features and costs.
The best way to know for sure what the right course of action is would be to give me a call and I’ll perform a free assessment that clearly outlines your best options.
If a second mortgage makes the most sense, then I’ll get you set up with a mortgage plan that fits your needs.