Second Charge MortgageMortgage with second mortgage
An ordinary mortgage where you lend to buy the house where you are living is a mortgage with a first fee. One second mortgage fee is another mortgage on the same ownership. What does a second mortgage look like? One second mortgage fee is a kind of secured mortgage. Using collateralized credit, whatever you are providing as collateral, can be taken back by the creditor if you do not maintain the pay back.
Second-charge mortgages are practically identical both to first-charge mortgages, but instead of making a quick payment in kind, use instead favorable equities right in your home as collateral. Same strict credit requirements apply: you cannot lend more than a certain multiple of your earnings (usually not more than 4.5x), and the creditor still has to do an affordable assessment by looking at your financials and seeing if you can affordable the money back each month.
Straight as a plain mortgage, a second charge mortgage may have a promoting interest fix or discount periode and will usually have a long time ( 25+ years ). As a rule, the interest is higher than for a first mortgage. If you are selling your home, you must have the first mortgage and then also the second mortgage.
When your house has gone down in value and you cannot repay the second fee, you could be prosecuted by the creditor for the deficit. What can you lend with a second mortgage? Theoretically, a second mortgage allows you to lend up to the amount of your house's capital.
E.g. if your house is £400,000 valuable, and you have a first mortgage for 250,000, then you have 150,000 in equities and may be able to lend that amount. Practically, most secondary mortgage banks want some latitude if their properties lose value or if your conditions in any way alter.
There is a limit on the amount you can lend, which varies from case to case; talk to a mortgage agent to learn more. Raising a second mortgage is a dangerous maneuver and you should never do it without first consulting a reputable mortgage consultant. When you are already battling to pay back your regular mortgage, you should not get a second mortgage.
If you do not keep up with the repayment on both mortgages, you could loose your home. Also, you should think twice before using a second mortgage to consolidated your corporate borrowings and other uncollateralized credits. Though this might look like a sensible options in the near run, but if you get a 25-year secondhand mortgage, you might end up having to pay a great deal more interest overall.
A second mortgage can be useful in some circumstances. A second mortgage might be the right choice if you want to pay a large sum of cash but a remorse commitment would cause a high prepayment penalty. Rescheduling is almost always a better option if you are currently outside the eligibility horizon of your mortgage or would only receive a small prepayment penalty.
Anyway, if you are deciding to get a second mortgage, speak to your mortgage provider first to see what they would charge for an extra mortgage - and make sure that you speak to a real estate agent who will find you the best business for your particular circumstances.