A second mortgage is a loan placed in second position on the property title, which can be used to reduce your monthly debt payments, make home improvements, or get cash out.
A second mortgage can also assist you in purchasing a new home for up to 100% of the appraised value.
Similar to other loans, such as, a home equity loan, a home equity line of credit, a home improvement loan, or a debt consolidation loan, the common factor is that the lender requires them to be secured by a second mortgage lien.
The second mortgage lender is sure to charge higher interest rates as their risk is higher. In the case of default, the second lender will receive money only after the ‘sale proceeds’ of your house, cover the entire first mortgage amount.
In cases where the sale amount is insufficient to pay the first mortgage, the second lender is loses the entire credit amount, and does not gain or earn anything from the mortgage loan.
Second mortgages are popular for consolidating credit card debts, and there are 2 ways to save money: By reducing your rates and payments, and by converting compound interest into simple interest. The repayment amount is higher as the rate of interest is also higher than the initial mortgage amount.
Thanks Amber. You managed to sort out a mess of paperwork, players, and finances to have mortgage that worked. Appreciate your patience, tenacity and friendly demeanor.
Phil – Duncan
It is better to use such bulky funds for heavy expenditures. The application and the processing details are the same as that of the first mortgage loan. These loans are in a way an extension over the first mortgage loan.
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