Are you planning to take out a second mortgage to buy a second home, pay off debts, or for other financial purposes? Start your search here: https://equitylenders.com.au/ and find the information you need to make a smart decision.
While this is a good option for property owners who already have an existing mortgage and substantial equity in their home, it’s not applicable to all borrowers.
Therefore it is highly recommended that you learn more about second mortgages before you apply for one. It’s best to get a better understanding of the financial option you’re getting into to avoid problems.
What is a second mortgage?
As previously mentioned, it is a loan taken out on a property which already has a mortgage. The loan basically uses the same property as security.
The second mortgage as the name suggests is ranked behind the first one.
In the event of a foreclosure, the first mortgage will be paid first before the second.
Say, for instance, you took out a mortgage for $200,000 on your home with Lender A. Then you took out the same loan amount as your second mortgage with Lender B. Because you failed to pay your debt, your property is sold for $350,000.
This means Lender A will be paid in full, while only a portion of your debt with Lender B will be paid. You will have to settle the outstanding balance in other ways.
This is one of the reasons that a second mortgage is harder to find than traditional home loans. But you will find a quick one through this site: https://equitylenders.com.au/ at a more affordable rate, complete with professional advice for faster and smarter decisions.
Now all you need to worry about is whether you qualify for this type of loan option.
How do you qualify for a second mortgage?
Because this is often considered a high-risk borrowing option, not everyone may be approved a second mortgage application.
There’s always the possibility that you can only borrow a limited amount or that a lender will refuse to offer the loan option to you.
Still, your chances are high if you get approval from the same lender that financed your first mortgage. Be prepared to pay a fee for an assessment.
Self-employed individuals may be approved for a second mortgage through a private lender only.
How much can you borrow for a second mortgage?
If you apply with the same lender as your first mortgage, you may get up to 95% loan to valuation ratio.
If you apply with a different lender, you get up to 85% loan to value ratio.
The final amount you can borrow largely depends on your specific situation.
Why should you take out a second mortgage?
There are several advantages of doing so:
Access equity in your home that can help free up your cash flow. It’s the best way to benefit from the home equity that has built over time.
Have the opportunity to consolidate your debts and pay them off from the equity in your home. One headache out of the way.
Have the means to pay for home renovations or repairs, whether to increase property value or improve your quality of living.
Moreover, a second mortgage is a better alternative to refinancing because it doesn’t involve exit fees, break costs, and other legal fees.
On that note, check out https://equitylenders.com.au/ to help you get started on your second mortgage application.