Utilise Your Home Equity with a 2nd  Mortgage Loan

A second mortgage is a loan that is applied for while the original first mortgage loan is still in place. If a security property is sold the 1st mortgage loan lender will receive the amount owing to them first, and then the balance will go towards repayment of the 2nd mortgage lenders debt. Due to this, the interest rate for the 2nd mortgage funding is higher, and the amount you can borrow is lower compared to the first mortgage loans. This is because the loan amount is determined by the available equity available in the property.

Whenever most people purchase a property or a house, they apply for funding from a traditional financial institution for their first mortgage loan. This type of funding can take time to establish however they are long term loans with a maximum 30 year term. Once your first mortgage is established, in the future, you may wish to borrow more money you can consider a second mortgage loan. For this purpose, it may be better to look to the private lenders to assist. Private lenders use the property as security and the funding is known as a second mortgage. First mortgage loans have repayments based on monthly EMI (equated monthly instalment) that includes a portion of the interest and principal in the payments. Over time the equity in a property will increase once a portion of the first mortgage debt is repaid.

The difference between the current market value and the amount outstanding on the first mortgage is known as home equity. A borrower can again decide to borrow funds against their home equity for managing other expenditures. The funding they apply for against home equity is called a second mortgage loan. It is a lump sum amount that the second mortgage lenders give to the borrower at the time of approval.

You also have to pay the 2nd mortgage, like the first loan mortgage, in a specified time at a variable or fixed interest rate, based on the loan agreement signed with the lender. Second mortgage loans can be used for both business and consumer purposes however this depends on the lenders.

SEE IF YOU QUALIFY

Second Mortgage Requirements

For qualifying for a second mortgage in NZ, you should be able to meet the lenders requirements. The borrower also needs to have a decent equity amount on the home, as they will be using the home equity for the 2nd mortgage in NZ. Thus there should be enough equity to take on the second mortgage, generally second mortgage lender will not exceed 75% of the value of a property and this must include the current first mortgage debt also.

• Borrowing Limits

The borrower can get a large loan amount with second mortgage funding providing there is sufficient equity. Since the 2nd mortgage lenders use the house or the property as collateral, the more equity the borrower has, the better. Most second mortgage lenders in NZ will approve a loan against 75% of your property or home value. However, the amount varies according to the lenders.

• Approval Time

There is a particular process and time for acquiring a home equity second mortgage loan. The lenders will evaluate the equity value and information provided with the application. It usually varies from 1 to 2 days, depending upon your circumstances.

• Cost

Some costs are associated with taking out second mortgage finance, like costs to run a credit check, establishment fees and valuation fees. Some second mortgage lenders will capitalise all costs into the loan amount.

At HomeSec, we have a simple application process that ensures the borrowers have flexible loan terms and have an exit strategy to ensure repayment of the 2nd mortgage loan. While considering the loan application for a second mortgage loan, we check whether the property has equity available, the funds are being used for a business use and an exit strategy to repay the loan.

How to get second mortgage finance with bad credit?

It is difficult to find a traditional bank to offer a second mortgage in NZ on your home or property with bad credit. However, the entire team of HomeSec is committed to providing you with a second mortgage loan with the best repayment terms and interest rates. You do not have to spend valuable time doing painstaking research or going through complex financial terms and conditions. HomeSec offers a simple approval process for 2nd mortgages and delivers an outstanding customer experience.

At HomeSec, you can get a second mortgage, even without having a perfect credit score. We evaluate each application of the borrowers on their merit. It helps us understand their requirements and how to offer the best deals according to their specific needs. Since every circumstance is unique, we adjust our customized approach accordingly. We set up 2nd mortgages in a way the borrower can repay them hassle-free without difficulty. Our team of finance professionals also strive to provide the best honest and transparent service. We offer a flexible range of options to the borrower for a 2nd mortgage, and they can select the best one based on their needs.

2nd mortgages in NZ are usually for a shorter period, ranging from one month to one year, providing additional funding to the borrower for any genuine worthwhile business purpose. At HomeSec, we recommend the best solution according to your circumstances and offer funding in as little as 24 hours. So, contact us to know more about our services and how we can help your business today.