Benefits of Going for a Second Mortgage

• January 6, 2017

Just as the name suggests, a second mortgage is a loan taken on a property that is already mortgaged. There are a number of reasons why people consider second mortgages and these may include but not limited to getting cash for home improvements, creating a home equity line of credit, debt consolidation, property investments and much more. In as much as second mortgage comes with its own fair share of restrictions, it also has a number of benefits which cannot be overlooked. Here are some of the benefits that come with taking a second mortgage-:

Quick and simple process

The process of getting a second mortgage is quick and simple compared to other types of loans, because you are borrowing against what you already own: home equity. It requires less documentation and paperwork and this makes it an ideal choice for individuals in need of bridge financing for a short duration or when they are in urgent need of funds to take advantage of a lucrative investment opportunity that won’t be available if they delay.

Allows access to higher loan amounts

This is perhaps one of the greatest benefits of a second mortgage. Since it is tied to your homes equity, it can allow you to access a higher loan amount compared to a personal loan. This is because the creditor has a greater security on his loan due to the fact that the mortgage has been secured using a real property as the collateral.

Second mortgages come with competitive interest rates

The other admirable benefit of a second mortgage is that it comes with very competitive interest rates, though they may be higher than those of the first or the initial mortgage. However, the rates in the second mortgage will still be lower than what is being offered by other financial institutions or credit cards. Due to this, people who find themselves overwhelmed with credit card debts, car loan payments or other high interest debts normally consolidate all these accounts and pay the debts using a second mortgage loan. With such an arrangement, they pay their high interest and smaller loans with a new low interest second mortgage loan. They thus end up with lower monthly installments as well as lower interest rates.