Everything You Need To Know About Second Mortgage

In this blog, we are discussing what exactly a second mortgage is and why it is used.

What is a ‘Second Mortgage’?

A second mortgage (junior-lien) is a type of subordinate mortgage made while an original mortgage is still in place. Let’s say, you secure a loan using the property as collateral for the second time and the first mortgage is still in effect. Home Equity Lines Of Credit (HELOCs) and Home Equity Loans are common examples of second mortgages.

Why does it come with a higher interest rate?

In the event of defaulting a payment, the original mortgage tends to receive all proceeds from the liquidation of the property until it is reimbursed completely, then the second mortgage gets repayments. If there is not enough equity to pay off both the loans, the second mortgage lender is at the risk of not receiving the full amount owed. This is the reason, why the interest rate for the junior-lien is way too higher than the first mortgage.

The first mortgage is basically used for buying a property. The second mortgage is utilized to meet expenditures that are beyond to be financed such as funding a child’s school/college fees, buying a vehicle, or repaying other outstanding debts.

Why is a second mortgage preferred?

Second mortgage is usually obtained to meet the following purposes:

• Merge other higher interest debts into a single lower interest payments
• Creating a Home Equity Line Of Credit (HELOC)
• Home repairs & renovation
• To avoid paying PMI on their first mortgage

If you are looking for a second mortgage, you should approach an alternative lender like Global Capital Commercial. The company ensures to provide the best possible solutions related to the Second Mortgage, while ensuring fast approvals and competitive interest rates. GCC offers second mortgages up to 80% LVR with very competitive pricing.

For more information or apply for the loan, contact the company immediately.