Understand Second Mortgages
A second mortgage taps into the equity in your home and provides you with the funds you require, while being in "second" position behind your first mortgage lender.
What Is A Second Mortgage
A Second Mortgage is a type of loan that is registered on title to a property after or “behind” a first mortgage lender.
A second mortgage can be a regular loan, private loan, a personal loan through a private lender or even a line of credit product from a major financial institution or an alternative lender.
For example, some borrowers apply for a second mortgage because they need to complete a debt consolidation to eliminate monthly credit card payments or because they need to pay for a child’s education and do not want to pay a pre-payment penalty to break their existing mortgage.
In some situations, they may have bad credit and cannot refinance their first mortgage, so they seek an alternative or private loan without losing the interest rate on their first mortgage.
A second mortgage is not just for those with a weak credit score. They can be offered with the best mortgage interest rates or high-interest rates since it ultimately depends on the applicant, employment, credit score and property.
In a nutshell, a second mortgage taps into the equity in your home and provides you with the funds required while being in subsequent position behind your first mortgage lender.
Why Does Mortgage Priority Matter?
As discussed above, your first and second mortgage are labelled in this manner because their priority represents which lender will be paid out first in the unlikely event of mortgage default, and ultimately Power of Sale or property Foreclosure. Therefore, priority legally determines which lender will be paid out first.
As a mortgage broker, I offer products that can help clients in their unique situation. Do not hesitate to call me to learn more about our mortgage rates for second mortgages or how second mortgages work.
A second mortgage can be a regular loan, private loan, a personal loan through a private lender or even a line of credit product from a major financial institution or an alternative lender.
For example, some borrowers apply for a second mortgage because they need to complete a debt consolidation to eliminate monthly credit card payments or because they need to pay for a child’s education and do not want to pay a pre-payment penalty to break their existing mortgage.
In some situations, they may have bad credit and cannot refinance their first mortgage, so they seek an alternative or private loan without losing the interest rate on their first mortgage.
A second mortgage is not just for those with a weak credit score. They can be offered with the best mortgage interest rates or high-interest rates since it ultimately depends on the applicant, employment, credit score and property.
In a nutshell, a second mortgage taps into the equity in your home and provides you with the funds required while being in subsequent position behind your first mortgage lender.
Why Does Mortgage Priority Matter?
As discussed above, your first and second mortgage are labelled in this manner because their priority represents which lender will be paid out first in the unlikely event of mortgage default, and ultimately Power of Sale or property Foreclosure. Therefore, priority legally determines which lender will be paid out first.
As a mortgage broker, I offer products that can help clients in their unique situation. Do not hesitate to call me to learn more about our mortgage rates for second mortgages or how second mortgages work.
