What is a second mortgage?
A second mortgage is a loan which is registered on the title of a property after another mortgage (the first mortgage) and, therefore is behind the first mortgage in priority.
In the event of default and sale of the property, the second mortgagee will only be paid if there are funds left after the payment of the first mortgagee
Second mortgages attract a much higher interest rate than first mortgages, plus upfront fees. Still, a second mortgage can sometimes be an effective solution, particularly in short-term situations.
In many cases, customers do not need to produce as much income evidence and supporting documentation as for a standard mortgage, so the turn-around time for receiving the funds is usually quicker.
Here are some recent examples I have dealt with:-
- A self-employed business owner required $35,000 to invest in his business. His own bank declined to lend him any more funds because he didn't have financial statements prepared by an accountant. He only required the $35,000 for four months until the sale of a property came through. I arranged a second mortgage for him with a minimum of paper-work required.
- A property investor needed $22,000 to finish doing up a rental property so she could put it on the market. Her own bank turned down her request for funds because she had been late paying her mortgage payment for the last few months, due to having no tenant in her rental property. I arranged a $22,000 second mortgage, which gave her the funds she needed to finish the work to her rental property and get it on the market.
To find out if a second mortgage might suit your needs, contact me now.