Why Would Someone Take Out a Second Mortgage?
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Second mortgages are not only hard to be approved for, but they are also risky. However, despite their risk, there are some reasons you may benefit from taking out a second mortgage.
- Second mortgages allow you to access the equity in your home, which can give you more cash flow for renovations or other improvements.Â
- Second mortgages can also help you consolidate your debts. By accessing the equity in your home, you can make just one larger loan repayment than several smaller ones.Â
- Second mortgages are an alternative to refinancing your existing mortgage, allowing you to avoid break costs, exit fees, and other costs associated with refinancing.Â
- Second mortgages can allow you to increase the value of your home by giving you the funds you need to make renovations and repairs.Â
- If you are going to be the guarantor on a relative’s home loan, securing a second mortgage can help you provide more security for the lender.Â
- If you want to refinance but your fixed-interest rate is higher than the current interest rate, a second mortgage is a great way to borrow additional money.Â
What are the Risks of Taking Out a Second Mortgage?
While there are many reasons you may take out a second mortgage, you should also be aware of the risks of doing so, including:
- Increased debt and managing two repayments
- High fees and lower LVRs
- Limited options and fewer features
Before applying for a second mortgage, consult with the brokers at Mortgage House. We can assess your current situation to help determine if a second mortgage is the right solution. If so, we can help you secure a second mortgage with competitive rates and beneficial features. If not, we can help you find a better option.Â