Second Mortgage – How You Can Refinance Your Mortgage For A Second Mortgage
Second mortgage options are easier if you look into refinancing your first property or home.
Your option to refinance the 2nd mortgage must never be taken with a grain of salt, it is something to spend a good amount of time to research first.
In this article we have put together the key tips for you to read below.
Yes, of course, it’s a way of getting extra funds, but it also involves the responsibility of a new loan or financial commitment.
You have to make sure that the second mortgage doesn’t only come with surplus cash, but better loan terms and rates as well.
Not just any situation would warrant refinancing and not every financial thirst can be solved with a second mortgage.
Remember that you must contemplate every factor including the additional expenditure involved with the procedure before making your decision.
For example, lawyer fees, administration charges, bank fees and credit score ratings.
Below are a few excellent reasons that would merit refinancing with another mortgage.
Personal mortgage insurance might have been levied on your first or even existing mortgage, but if you refinance with your second mortgage, you can avoid that.
PMI is extremely expensive, though you may not even notice it because it could already be included in your monthly payments. However, PMI can cost you thousands of dollars each year.
Through refinancing your mortgage, you may consolidate your existing mortgage and possibly even other debts into a single loan.
Of course, this could just be advantageous if your 2nd mortgage comes with better rates and terms, so be careful when shopping!
Were economic times especially tough when you took out your first mortgage?
That may be the reason behind why your present rate of interest is remarkably high.
But today’s market is significantly different, and there may be low interest rate mortgages that you can now benefit from.
With low rates of interest, you’ll be able to enjoy decreased monthly payments also, so it will be an ease on your purse strings.
How about the terms and conditions of the current mortgage, are you satisfied with them?
If not, then you can refinance with another mortgage that has terms that match up with your existing financial needs.
If your first mortgage is due to expire within the current year, but you have not yet adequate money for that balloon payment, you may refinance with a 2nd mortgage to repay the previous payment.
Then you can rest easy with an extended loan period.
Are you looking to gain cash for a large scale investment?
Last but not the least, refinancing with a second mortgage will supply you with extra cash.
Take note: When we say ‘refinancing with a second mortgage’, this really means adding a second property to your investment portfolio and adding that capital to your loan.
This is for people that want to invest in a second home, purchase a buy to let property or make large scale investments that will bring them a great return in the long-term.
The volume of surplus cash at your disposal will obviously hinge on the amount you’ll borrow in addition to the amount that you have to pay to repay the present mortgage.
How do you talk to the banks like a boss?
Remember that the good thing about property is that (generally) the value increases over time – especially with Freehold purchases.
So basically when you go to refinance, you are telling the bank to give you a better rate and add a second property, because you now have greater value in your first property.
Plus, you have been paying down the first property in instalments up until today, right?
So this is known as leverage now. It’s in your favour!
For example, when you decide to sell your house, you may use a part of the profits to repay your second mortgage.
If you were lucky to receive the very best refinance mortgage rates, then you are probably going to get extra cash again once you close your loan.
The Steps To Obtain a Second Mortgage
If you are bound to a specific lender, or you want to look for a different loan provider, then here is the thing you must do to refinance with another mortgage.
Step 1: Amend or fix credit ranking
It is the only way to really become eligible for the best mortgage refinancing rates. Although you can do this alone, you may also utilize the services of a credit repair specialist. Or visit a website like Experian or Noddle.
Step 2: Browse for interest rates
Have a look through the current levels of interest rates. Learn what companies provide the lowest interest rates, what they need are in return and the expenses concerned to join them.
Step 3: Make an application
Reach out to the lender, or mortgage broker, who is the best for you and begin your application. This can be done easily online now for a second mortgage.
Ensure that you read the rules of the second mortgage before signing on the dotted line and always make the decision when you are one hundred percent certain about your future goals.
Faithful in your success!