2nd mortgage

A second mortgage as the name suggests is a mortgage loan secured over an existing mortgage loan. The 2nd mortgage is considered as subordinate to the primary mortgage and generally has a higher interest rate and a shorter term of payment. This is because the risk to the lender in case of a 2nd mortgage increases with all proceeds of the property going first towards the payment of the first mortgage.

Who goes for a second mortgage?

There can be many reasons why a borrower would go for a second mortgage; but the primary reason would be pay a lower mortgage downpayment. A second mortgage loan generally lowers the downpayment into half and can in many cases even prove to be a profitable venture.

For instance, borrower A gets a mortgage that has a downpayment of $ 40,000. Now borrower A can reduce the value of the downpayment to $20,000 by getting a second or junior mortgage for $20,000. Thus reducing his downpayment to half.

In addition a second mortgage helps a borrower to make full use of the equity value of his home.

Second mortgage Calculators

The best way to find out if you can actually benefit by going for a second mortgage is by using a second mortgage calculator. A second mortgage calculator based on the input provided by the buyer will calculate the exact savings that the mortgage buyer can get by going for the mortgage. Almost all websites that offer second mortgage services offer 2nd mortgage calculators. Some of them are 2nd-secondmortgage.com, mortgagepaymentcalculator.ws etc.



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