Are you thinking of doing some major home improvements, or do you have to finance a college degree? Then it may be worth your while considering taking out a second mortgage.
A second mortgage is a simple interest loan which has second place on the property title. It has no effect on your existing first mortgage. A second mortgage is also known as a home equity loan, an equity line of credit, a home improvement loan or a debt consolidation loan. You can negotiate loans up to 125% of the value of your home, so you do not necessarily have to have equity left in your home.
There are two basic types of loans you can negotiate as second mortgages. These are equity seconds, which use the equity you have in your home as the basis for a loan. This gives you a good rate of interest as the lender has a call on your property. The other category of loan is called over-equity seconds, and because the loan is not secured completely on equity, it will attract a greater rate of interest.
Many people use a second mortgage to secure a line of credit, using money as they need it and repaying it as they can. This allows much greater flexibility, and of course you pay interest only on the money you have borrowed.
You may find that the interest on your second mortgage is tax deductible, making this a really effective way of borrowing money. If you need to borrow a sum of money, a second mortgage must be your first consideration.
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