Private & 2nd Mortgages
Give second mortgages the second chance they deserve.
Most people when they think of a second mortgage think of high rates, huge fees and an image of a loan shark who you will be tied to for the foreseeable future. While some of this might be true we want to take the stigma off the meaning of second mortgage and how they can actually benefit you.
What is a second mortgage really?
A second mortgage is a mortgage placed on a property which is already encumbered (mortgaged) with one mortgage. Determination of first, second, third mortgage etc is determined by priority of registration (time and date when it was registered against the property.)
What that means is if you have a first & second mortgage on your property – if for some reason you went into default – the mortgage in first position will recoup its money first followed by the second mortgage. The second mortgage would not get paid (or they would not recoup the loan they leant on the property) if there was not enough money to cover the cost of the first.
That is what makes second mortgages more expensive (higher interest rates) than first mortgages because there is a higher risk for the lender.
How can a second mortgage help me?
The need for second mortgages is growing and can help you access equity in your home without being forced to sell or pay a huge penalty when breaking your existing mortgage. Even if you are willing to pay the penalty for breaking, new government refinancing rules will only allow you to access up to 80% of the equity in your home. Second mortgages through private lending can help you to access the equity over and above that 80% if you need it.
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