What is a Second Mortgage Loan?

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Mortgage Loan

A second mortgage loan, also known as a junior-lien loan, is a loan secured by your home that you take out while also having another loan secured by your home. It is a lien placed on a property that already has a mortgage on it.

A lien is placed on the portion of your home that you've paid off when you take out a second mortgage. You can utilize your second mortgage money for almost anything, unlike other forms of loans including auto or student loans that can be used only for specific requirements. Second mortgages also have substantially cheaper interest rates than credit cards. This distinguishes them as a viable option for consolidating credit card debt.

How Does a Second Mortgage loan Work?

A second mortgage loan lets you utilize your home’s equity and put it to work. Rather than having that money locked up in your home, it’s available for your current expenses. Depending on your financial goals, this option can be beneficial or detrimental. 

Specific necessities for getting approval for a second mortgage loan will vary on the lender you are working with. However, the primary requirement is that you possess some equity built up in your home. Your lender will generally only permit you to take out a single portion of this equity, varying on what your home's worth and your leftover loan balance on your first mortgage, so that you still possess a specific amount of equity left in your home (generally 20% of your home’s value).

To be approved for a second mortgage loan, you’ll mostly require a credit score of a minimum of 620, (though individual lender necessities may be higher). Also, do not forget that higher scores go with better rates. You’ll also probably require possessing a debt-to-income ratio (DTI) that’s lesser than 43%.

If you are searching for a short-term loan, you can utilize your second mortgage as security. Secured Capital Investments provides short-term loans with a second mortgage as security, fast and easily with funds in your account within 24 hours. For more information, visit www.securedcapital.com.au

 

Location: 1 Farrer Pl, Sydney NSW 2000, Australia

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