Many homeowners are not aware of the fact that they can take a second loan on their properties . The mortgage known as the first mortgage is usually taken while buying the property. The second mortgage against the same property, while your primary mortgage is still not fully paid, is known as the second mortgage loan.
A second mortgage ranks behind the first mortgage, which means that in the event of default, the first mortgage will get priority in terms of repayment. Only after the first mortgage has been completely repaid from the sale proceeds will the 2nd mortgage lender will be able to recover their mpnies.
A mortgage uses the equity in your home, and second mortgages operate no differently. The loan amount that the second mortgage lender will offer you will depend on the LVR % based on the equity built up in your home.
Interest rates are generally higher on second mortgages and this is because the second mortgage lender is taking a higher risk, as he gets second priority behind the first mortgage lender.
Private lenders can assist with First Mortgages, Second Mortgages, Caveat Loans and Property Development Loans.
