Considerations if You Are Thinking About a Second Mortgage

Have you ever wondered if getting a second mortgage was the right options for you? If so, here is some information to consider and some reasons why you may want to consider a second mortgage if you are looking to get a loan.

What is a second mortgage?

A second mortgage is a secured loan against the equity in your home. The amount of equity you have is what your home is valued at today minus what you currently owe on it. Considering the fact that most lenders will allow you to borrow up to 80% of your home equity with a second mortgage, the amount of money that you can get with this type of loan may be quite substantial.

How do you pay off a second mortgage?

In many respects, paying a second mortgage works much the same way as paying a first mortgage. You will be making monthly or bi-weekly payments until the term for your second mortgage has expired. Once you reach that point, you will have the option to pay off your second mortgage or to renew it for another term.

Your second mortgage however may differ from your first mortgage in the respect that second mortgages often have shorter terms, and they are often interest-only payments.

Another difference that you should consider is that a second mortgage will usually have a higher interest rate than your first mortgage because lenders will consider a second mortgage to be a riskier investment than a first mortgage. That being said however, the interest rate on your second mortgage will still be much lower than it would be on an unsecured loan such as a personal line of credit or credit card.

Can I still get a second mortgage if I have bad credit?

Yes! There are many private lenders that specialize in helping those with bad credit. If this is a concern for you, you should speak to your mortgage broker about your options.

When should I consider getting a second mortgage?

A second mortgage can be a good option for any homeowner who needs to borrow a large sum of money and has sufficient equity in their home as well as the capability of making the minimum payments on the loan.

Some common reasons for getting a second mortgage include financing home improvements, getting a down payment for another property, or funding a large purchase such as a vehicle.

When should I avoid getting a second mortgage?

While second mortgages have a lot of advantages, you will need to remember that you are essentially putting your home up as collateral to the lender. If you have any doubts about your ability to make the payments on your second mortgage, this might not be the right option for you as you could risk losing your home.

Contact Akal Mortgages today

If you are considering getting a second mortgage, you should contact a broker at Akal Mortgages. We can help you explore your options and compare the rates of many different lenders in order to help you get the best deal possible on your second mortgage.