Difference between 1st mortgage and 2nd mortgage
If a borrower defaults on a 2nd loan the first mortgage lender is paid before paying the second mortgage lender when the asset is dispersed from foreclosure. Considering the risk factor added to these subordinate home liens, most lenders will charge a higher percentage of fees in addition to requiring the consumer to borrower at a higher interest rate than was offered with their 1st mortgage.

2nd Mortgage Loan: Purpose
Money borrowed from a second mortgage loan can be used for just about anything. However, most of the borrowers use the money received through 2nd mortgage loan to consolidate debt, do home improvements or pay tuition fee of their children. Whatever you decide to do with your loan proceeds it is important to remember that if you default on your payment you can lose your home so you will want to make sure that you are taking the loan out for a worthwhile purpose.

2nd Mortgage Loan: Loan amount & Cost
2nd mortgage are considered more risky than 1st mortgage and therefore most lenders offer 2nd mortgage at higher rate of interest. 2nd mortgages can have loans with both fixed and adjustable rates. 15 year amortization schedule is the most Common 2nd terms for repayment. Lenders offer amount upto 125% of the value of home equity. However, the loan amount also depends upon borrowers’ profile. Similarly, since a 2nd mortgage loan is considered risky, lenders charge higher interest rate to compensate for the increased risk.

Another advantage of a second mortgage loan is that the interest you pay back on the loan may be tax deductible. Consult your tax advisor regarding your personal situation but in most cases the interest is 100% fully deductible as long as the combined loan to value of your 1st and 2nd mortgage do not exceed the value of your home.

Features of Second Mortgage Loan

1. No initial credit check
2. in principle approval within 24 hours
3. Customized pricing
4. Rate Lock, if you choose
5. can consolidate all debts into this new loan within 3 business days
6. Amount and rate of interest depend upon borrowers’ profile

2nd Mortgage Loan: Eligibility
Accepting or rejecting applications of accepting application for 2nd mortage loan on a higher interest rate depend upon the profile of the borrower. The various factors which are considered while reviewing loan applications are:

1. Verification of income
2. Full time employment
3. Previous record of payments
4. Any recommendation

As mentioned above, if you have secured your property to obtain a secured loan and after sometime you again need money for any purpose, your same property can be useful for you. In such case you can again mortgage your property, in addition to the first mortgage, to obtain another secured loan.