The jargon of mortgage financing is full of several notions and concepts that must be understood very well before committing to a mortgage loan, whatever its nature. Among these basic notions, the second mortgage loan remains one of the most used products by borrowers.
What is a second mortgage?
A second mortgage is a second mortgage obtained by a borrower on the same mortgaged property before having completed the repayment of the first mortgage. It is quite possible to get a second mortgage from the same lender (from the first mortgage), but it is easier to get it from a second lender. In the case of a second lender, new borrowing conditions are generally to be expected. It is certainly an interesting option, but it must be evaluated in all aspects and especially according to the repayment capacity and the budget of the borrower.
Why use a second mortgage?
The second mortgage is an interesting solution to consider when you need money as quickly as possible. It can be used, for example, as a means of financing for the acquisition of a new house, the completion of renovation work, or for the consolidation of debts. A customer who has just received a 60-day Notice and who has been refused by the bank may well go to a private lender to obtain a second mortgage and be able to repay their first loan. Even with a bad credit score or even if you are self-employed, it is normally possible to take out a second mortgage from private lenders. What you have to remember is that the interest rates of the second mortgage remain relatively higher than those of the first mortgages, but are still lower than those of vehicle and car loans. credit.
Hire a mortgage broker
If the jargon of mortgage financing is sometimes difficult to understand, it is nevertheless necessary to assimilate the concepts and notions relating to this sector. For this reason, it is important to use a mortgage broker before committing to a mortgage. Especially since the market is full of dishonest players, especially in the alternative mortgage financing sector, and it is therefore important to know how to detect the good lenders from the bad ones. Thus, each client can easily obtain an interview with a qualified broker who could well help him find the right lender and control the costs of his future mortgage. The broker also has significant know-how that allows him to negotiate well with lenders and to carefully analyze the offers in order to identify the one that would be the most interesting for his client.
Why opt for a second mortgage?
Obtaining a loan (real estate or consumer) the second mortgage can have different motivations such as:
- Keep outstanding amounts obtained at advantageous rates during a mortgage loan consolidation
- Obtain financing for a new project without touching the mortgage guarantee of your mortgage
- Take advantage of the advantageous conditions paid to owners as part of a homeowner’s credit buy-back…
For all these reasons, the second position mortgage seems to be one of the preferred solutions to guarantee to finance with limited risk for the borrower. In fact, by intervening only on consumer loans, this coverage facilitates the granting of a new loan over a repayment period of up to 15 years (or more) and at competitive rates.
