If you find yourself struggling to make ends meet, in need of some additional money for home repairs or home improvements, or just find that you have some financial need that you can't fulfill with your standard wages, you might want to consider taking out a second mortgage on your home.
Of course, when many people think of a second mortgage they think of the scenario that's usually presented in movies and on television of individuals drowning in debt who have had to take out several mortgages simply to stay afloat.
While this may be the case with some individuals, most people who take out a second mortgage do so simply as a means to cover expenses or to begin new projects using a form of collateral that is both high in value and easy to find a lender for.
Below is some additional information that will tell you exactly how a second mortgage works and how to get the best deal on your new mortgage that you can.
Defining the Second Mortgage
Before you can get a second mortgage, it helps to know exactly what one is. Basically, a second mortgage is a secondary loan that is taken out on an already mortgaged property. This loan is considered to be subordinate to the original mortgage, which means that the lender who issued the loan will only receive their money after the original mortgage has been repaid in the case of a default and the subsequent sale of the property.
Second mortgages are generally considered to be a higher risk than the original mortgage, since the lender which issued the original mortgage has first rights to the property because of this, interest rates for a second mortgage are usually higher than those for the primary mortgage.
Common Uses for a Second Mortgage
In addition to the examples provided above, there are many common uses for the funds received from a second mortgage. These loans are often used to consolidate multiple debts into a single monthly payment, or they may be used to finance a vacation or moving expenses.
Second mortgages are also a common method of securing startup capital for new businesses in lieu of a small business loan, and have also been used as alternative means for financing new vehicles, paying for medical expenses, and other large expenses that might be difficult to pay for out of pocket.
Shopping for the Best Mortgage Rates
In order to make sure that you get the best rate for your second mortgage, it's important to shop around at different lenders to see who has the better deal. Many second mortgages come from finance companies and mortgage lenders, though you should make sure that you keep your options open after all, if you decide to ignore certain types of lenders you might miss out on the best rates.
Request loan quotes in much the same manner as you would if you were shopping for a primary mortgage or other loan, getting quotes from a variety of lenders and online lending companies. Take your time and carefully compare both the interest rates that each lender offers and the repayment terms that you're expected to abide by.
Once you've found the second mortgage quote that has the best rates for the terms that they offer, investigate the offer further there's a good chance that it will be the loan for you. Verify the terms and rates that are offered, and submit your application; you're well on your way to getting the money that you need from your new second mortgage.
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About The Author
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.
