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2nd Mortgages plan? How a 2nd Mortgage is taken out?

2nd Mortgage is It is a loan taken against a home or other real property on which there exists already a primary or first mortgage. Equity is used as collateral for the second loan.

2nd mortgages are taken out if you want to repay debts and eliminate loan judgments, pay for your car or truck, purchase a 2nd home or vacation property or plan for a vacation. You can obtain the required cash by taking out a second mortgage on home that already has a first mortgage but has enough equity to be used as collateral for 2nd mortgage.

2nd mortgages are also commonly used to invest in a business or to avoid having to pay for mortgage insurance (in Canada such as CMHC or Genworth).

2nd mortgage's amount depends on the equity in your home and on the lender's willingness to take risk. Some lenders may lend up-to 100% or more in second mortgage but usually 2nd mortgages are issued for under 85% of equity of your home.

2nd mortgage lenders usually charge higher interest rate. If you use less than 80% of the equity in your home chances are you will a comparatively low rate for 2nd mortgage.

2nd mortgages may depend on first mortgage lender. Some lenders (of first mortgage) also put restrictions on how much second mortgage you can get when you get the first mortgage. read your mortgage contract carefully. Plan your 2nd mortgage to go along with your 2nd mortgage. If you don't do this you may end up paying huge penalty for when you pay off your second mortgage.



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