Expert Mortgage Brokers | Hamilton 2nd mortgage
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Hamilton 2nd mortgage

Second Mortgage

A second mortgage is a kind of mortgage registered against a property with another mortgage in first position. In this case, the property is provided as security for the mortgage and in the event there is a default in payment, the first mortgage will be cleared first.

In Hamilton 2nd mortgage can help finance a number of needs. For example;

  • Home repairs
  • Education
  • Debt Consolidation

Types of Second Mortgages

A Hamilton 2nd mortgage comes in different types. They can be institutional loans or private loans secured on a property. Home Equity Lines of Credit are also loans that are secured, often in second position, but technically are not mortgages. They are secured lines of credit. Some lenders provide Home Equity Loans and some lenders also provide home equity credit cards secured against the property behind previously registered mortgages in 1st or 2nd positions.

  • Home Equity Line of Credit

This kind of loan is also referred to as a HELOC. It is a line of credit that goes up and down relative to the amount that the home owner draws or pays back to the line of credit. It is, however, secured against the value of the property and has a fixed limit beyond which you draw any further. This maximum limit of the line of credit is set by the lender, which in most cases is a bank or credit union. Interest typically accrues daily to the balance and paid monthly. It differs from a fixed loan or mortgage in that the interest rates can fluctuate. This particular type of loan is not really a 2nd mortgage but is more handy that a 2nd mortgage when you need the flexibility to finance expenses over a short period of time. A perfect example would be financing a home renovation project.

  • Home Equity Loan

A Home Equity Loan is essentially a mortgage or loan secured against a property. The borrower can apply for an amount of money and then pay it back over time. This particular kind of 2nd mortgage may come in handy when you need funds to pay things like tax arrears.

Brief Analysis of First and Second Mortgages

In most cases, you will find that the interest rates on 2nd mortgage are typically significantly higher than 1st mortgages. The reason for this is because if a borrower defaults, the primary or 1st lender will get proceeds first from any power of sale. Only once the the 1st has been paid out and any outstanding property taxes will the 2nd lender get paid. Also, if a home owner defaults on their obligations to pay the 1st mortgage, the 2nd mortgage holder has to make the payments to the 1st mortgage holder and property taxes to avoid interest and fees accruing. Too many accrued fees and interest means that a 2nd mortgage holder may end up not getting their money back if the property has to go through power of sale.

Benefits of Hamilton 2nd Mortgage

  • It enables a home owner to consolidate high interest debts into one simple payment.
  • If the 2nd Mortgage holder is a private lender, while the rates of interest may be higher, the speed at which a private lender can fund a mortgage is a lot quicker than a conventional institutional lender.