Finance

Going for a Second Mortgage: Pros and Cons

Before purchasing Baretta Alarms, let’s talk about your house first. People start looking for a second mortgage when they already have a mortgage on the property they’re still paying off but don’t want to refinance the loan. Before deciding if a second mortgage is a right move for you, consider the fact that if a debt isn’t paid and the property gets sold, the lenders will first collect the money for the first mortgage, and then will take the money for the second.

In some cases,  people may choose to get a second mortgage rather than refinancing your loan, so let’s explore the ups and downs of this alternative.

The Reasons Why People Go for a Second Mortgage

There are 2 main reasons to go for this option:

  • In case you want to use the equity of your home in order to receive a bigger loan, but the lender hasn’t approved the request.
  • If a family member can guarantee the purchasing of a house, a second mortgage will ensure the bank that the loan will be paid.

Pros

  • This is a solution for parents to help their children to purchase a property, but don’t have the financial means to support them. With the aid of a second mortgage, someone could buy a house, even if they don’t have the necessary amount of cash for the down payment.
  • If there is a parental guarantee, you won’t have to pay lenders mortgage insurance, also known as LMI. This will save you some money, due to being an expensive insurance commonly requested by the banks.
  • In case there is enough equity on the house to sustain the loan, a second mortgage will allow you to get up to 105% of the price of the property. This is probably the biggest advantage of taking another mortgage.

Cons

  • It’s time-consuming

The whole process of getting a second mortgage is a lot more complicated than it is for a first mortgage. Partly because they are rare, and also because the banks don’t really like second mortgages since they are quite risky. That’s why the paperwork will take some time.Also, due to not being common, you’ll discover that many bank employees aren’t familiar with the process and so, errors and delays are often encountered.

  • It’s hard to get

Banks aren’t normally willing to let borrowers get a second mortgage, so they’ll try to make you reconsider your decision, or even decline your request.

If that happens, you’ll have to go to another financial institution, thus having to pay two separate loans that each comes with its costs and fees.

  • The extra fees

Unlike the first mortgage you’ve taken, the second one will come with additional costs and fees. This means that you’ll have to pay bigger charges.

Also, consider that the first lender will have to approve of you getting that second loan, so a tax will also have to be paid to the current lender.

In conclusion, taking a second mortgage is a personal decision that has to be made taking into consideration all the advantages and disadvantages, as well as the end goal. Whether you are looking for home loans, personal loans, or looking to consolidate debt, you can contact NSW Mortgage Corp for all your needs.

5 Benefits of using a Mortgage Calculator

Whether you are buying a new home or a commercial property, you will need to be familiar with a mortgage calculator but what exactly this tool is. It is a tool that can estimate your monthly payment and total payments. This is mostly available on bank’s website, loan providers, and even mortgage brokers. The basic information you will be required to enter on this calculator is the principal amount, payment period, interest rate, repayment frequency and down payment. Some complex mortgage calculator will also ask for your insurance, taxes, and more. Aside from providing you the calculations for your property loan, what else does this tool helps you with? Below are the 5 benefits you can get by using a mortgage calculator.

 

  1. Help with budgeting

Mortgage calculator helps you in determining what you can comfortably spend for your dream property. If your budget is enough and what particular price range you can afford. This tool aids you in making a confident decision when searching for a house or any other property. If you are not capable of buying a new home, the calculator will provide your calculations on the amount you need to save to get there. It will be your partner throughout the process of buying a property.

 

  1. Compare rates

In the process of checking with a different bank and local loan providers, you will be presented with different details and use the mortgage calculator can help you compare rates. By keying the basic details needed, you will eventually determine which loan provider gives the lowest repayment. This is extremely helpful when deciding whether to get an adjustable or fixed mortgage.

 

  1. Helps save money

After calculating the variables including amortization, down payment, and interest rates, you will be presented with the best options. This is an advantage when entering into a mortgage agreement. Not only you can pick the perfect loan provider but also the right property that is suitable for your budget and of courses your capacity to pay.

 

  1. Give you a better understanding

By applying different scenarios, you will learn on how to use the mortgage calculator plus you can discover how mortgages work and the criteria used by the banks to make their own calculations. This tool assists you in deciding the maximum interest rate and repayment period you can afford. Undoubtedly, you need to depend on this tool when buying a property because it makes calculations easier for you.

 

  1. Saves big

With the availability of www.calconic.com mortgage calculator via Calconic_, you can now perform the calculations yourself without the need to ask a broker or banker if you are eligible or not. It doesn’t just save you time but also money.

 

You might encounter different types of mortgage calculators while you are searching the internet so it’s paramount to know that other calculators also help with calculating the loan capacity, amortization, additional property costs, prepayments, and premiums. Nonetheless, a mortgage calculator can aid you when planning to buy a property or major home renovations. It is a simple tool that can do a great job of keeping you in line with your budget.

 

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