As a non bank broker I will suggest second mortgages sometimes as an option.
This is especially when your bank or non-bank lender that holds the first mortgage is unable or unwilling to help.
Second mortgages are generally used for a short period of time (usually anywhere from 6-months up to 5-years) to provide additional funding to “fix” a problem. The advantage with using a second mortgage instead of refinancing the whole mortgage is you retain the main lending at more competitive rates. Of course if I think there are benefits to refinancing you mortgage then I will discuss this with you.
Common uses for second mortgages are;
- To pay for renovations
- To provide the extra deposit required – for low deposit mortgages
- To finance the building of a minor dwelling
- Finance for a business or refinance expensive business debt
- To pay off tax arrears
- To pay mortgage arrears
- Debt consolidation of some short term debt – hire purchase or credit card debt
- Plus many more reasons…
Most banks and many mortgage brokers do not have access to the same range of second mortgage lenders that I have access to, and many do not know when it’s appropriate to use second mortgages either.