Second Mortgage Definition
A second mortgage is a type of subordinate mortgage which is an additional loan taken out on a property that already has a mortgage on it. The rates attached with a second mortgage are always going to be higher than the principal first position mortgage because the second lender will be in the second position for your property’s title.
What are the additional risks with getting a Second Mortgage in Whitby?
When taking out a second mortgage in Whitby, it’s important to be aware of the additional risks involved. As the lender is in a second position on your property’s title, they may not be repaid in full if you default on payments and the property is repossessed. To compensate for this higher risk, second mortgage lenders will usually offer higher interest rates than for a traditional mortgage. A settlement attorney will be needed when selling your home to ensure each lender is paid in full during your sale.
A second mortgage can be a great way to capitalize on the growing equity in your home without breaking your current mortgage product and taking on a prepayment penalty. A second mortgage can also be a great way for homeowners to consolidate debt, source additional down payment funds for another purchase, or fund renovation costs. Though second mortgages often carry higher interest rates than first mortgages, these rates are still often lower than high interest credit cards, car lease payments, or unsecured lines of credit. For homeowners with an existing mortgage who have good credit and more than 20% equity in their home, a second mortgage can be a smart financial move.
What are other options similar to a Second Mortgage?
An alternative to a second mortgage can be a Home Equity Line of Credit. Also known as HELOC. Premiere Mortgage is proud to offer our clients the Premiere Home Equity Line of Credit. This product allows you to access the equity in your home at any time and pay back the funds at any time. With a Premiere HELOC, you’ll have the cash right away, but also be paying interest right away as part of your new monthly mortgage payment.
However, mortgage rates for a Premiere refinance may be lower than for a HELOC. Our expert brokers can help you decide which product is best for your unique situation. Contact us today to learn more!