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. Banks especially are unwilling to help, and even more so at the times when you really need the extra lending.
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.
When People Use Second Mortgages
There are a number of reasons that people want extra lending, and therefore when people may use a second mortgage.
As mentioned, a second mortgage might not have been your first choice but when you look at the options it may be that this would be the most suitable.
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.
