A 2nd Mortgage loan is a loan taken while the 1st mortgage is still being paid off. A 2nd mortgage may be preferable to remortgaging the existing mortgage loan. The 2nd mortgage loan will usually be secured against the existing home equity.
Getting a second mortgage loan is a way to be able to invest in the UK housing market and take advantage of the growing buy to let sector.
To get a second mortgage lender you will need to meet certain lending criteria. This will be a mixture of:
- Equity – deposit.
- Sufficient Income to mortgage ratio
- Issue of affordability. How much can you afford to pay?
- Track record in paying previous mortgage payments / credit rating.
However, the lending criteria are usually less strict for a 2nd mortgage. Therefore, it is easier to get the 2nd mortgage approved
Advantages of 2nd Mortgage Loans.
- Consolidate debts which are accruing a higher interest payment.
- Invest in a second home, which can be rented out to earn income. In certain areas, the rentable income may be sufficient to pay the mortgage repayments.