Second Mortgage in Orleans
If you are struggling to fulfill your financial responsibilities, taking out a second mortgage could allow you to utilize the equity of your home without having to sell it.
The team of brokers at Borrowing Made Simple has been assisting homeowners in making smart mortgage decisions for years. We can guide you through the available second mortgage options and find you the very best rates in Orleans.
Set up an appointment with us today to get started. Call (343) 763-2019.
How Does a Second Home Mortgage Work?
A second mortgage is a loan that can be taken out in addition to your primary mortgage. The first and second mortgage must then be paid off in unison. However, the second mortgage loan is taken out for a shorter period, usually between 1 to 2 years.
Homeowners may choose to take out a second mortgage if they:
- Have outstanding high-interest loans to pay off
- Need to fund their retirement
- Need to pay medical bills
- Invest in home improvements and renovations
- Would like to fund post-secondary education
How Much Can You Borrow with a Second Mortgage?
The amount you can borrow with a second home mortgage depends on the total value of your home, as well as how much your lender is willing to let you borrow.
Typically, homeowners will be able to borrow up to 80% of the value of the property minus the outstanding amount on the primary mortgage.
Is it a Good Idea to Take Out a Second Mortgage?
Taking out a second mortgage will allow a homeowner to take advantage of their assets without having to sell their property. It can be a good decision for people with low income or low credit scores as qualifying for a loan or line of credit is more challenging. While second mortgages may be of great benefit in a financial bind, there are some risks to consider.
Second Mortgage Rates and Risks
When you take out a second mortgage, you must find a different lender than that of your first mortgage. Navigating the primary mortgage market is difficult without professional guidance, let alone a second mortgage. You’ll need to reach out to a broker to make sure you’re on the right path.
Another challenge of second mortgages is their high-risk nature. If you are unable to pay off your mortgages, your home will face foreclosure. In this instance, your first mortgage will be paid off before your second. For this reason, lenders tend to charge a much higher interest rate on second mortgages than on primary ones.
It is crucial to understand these risks when considering getting a second mortgage. Get in touch with our team today to find out more information. We’ll be sure to lay out all your options, ensuring that you have all that you need to make an informed decision.
What Is the Difference Between a Second Mortgage and a Home Equity Loan?
Like a second mortgage, a home equity loan allows you to utilize your home equity without selling your property. A home equity loan is a less risky option than a second mortgage, but it is more difficult to meet the requirements. While every lender’s requirements vary, here are a few of the most common qualifications for a home equity loan:
- Minimum 20% down payment or equity
- 43 – 50% debt-to-income ratio
- Prove of employment or steady income
- A good credit score (620 or higher)
In return, you will be granted a more extended repayment period and a lower interest rate than that of a second mortgage.
Find the Best Second Mortgage Interest Rates in Orleans
If you are interested in a second mortgage, trust the team of experts at Borrowing Made Simple to find the very best rates and most trusted lenders.
For unbeatable pricing and advice, set up a consultation with our team today. Call (343) 763-2019.
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