Second mortgage refers to a loan that is secured against the property that already has a first mortgage. These loans are also referred to as secured loans and home equity loans.
A second mortgage is ideal if you are in need of money to pay off your debts or are looking to switch over to a different dealer to get better interest rates and deals. A second mortgage gives as much choice as a first mortgage. The best mortgage brokers can provide a host of deals on a second mortgage. You can choose from fixed or variable rates, discounts, trackers, and capped rates. How much you borrow will depend primarily on why you want the mortgage.
According to standard industry terms, you need to keep a deposit to secure a second mortgage. Second mortgages can be used for a plethora of activities including funding a vacation, making new purchases, undertaking renovations and for debt consolidation. Since second mortgages are secured against the property of the borrower, a default could lead the lender to repossess the property.
The best benefit of opting for a second mortgage is that you get lower interest rates. You pay less than your previous mortgage and the affordable loan of the second mortgage can be used to pay off your earlier debts. If the reason why you are taking a second mortgage is to switch to a different lender or a new deal, you can look to saving a lot of money not only in the interest rates but also in your repayments.
There are certain costs that you might have to bear though while you are opting for a second mortgage. While in many cases the lenders pay all the fees that are associated with the second mortgage like the valuation, legal, and arrangement fees, in some cases, you might have to pay the charges yourself. You need to check this with your lender before you apply for the mortgage.
When you take a second mortgage, the duration of the repayment is much longer than most other loan products. This means that your repayments would be spread over a long period and the amount to be paid back too would be low. Keep in mind, however, that repayments over a longer period adds to the overall costs.
To know more about second mortgages, it can help to contact the best mortgage brokers in your area. They will consider your particular situation and offer you the best available deals. Make sure to research and shop around a bit before zeroing down on any deal.