What Interest Rate Should I Expect To Pay On A Second Mortgage

The interest rates on Second Mortgages are typically higher than those of First Mortgages. This is primarily
due to the increased risk for the Second Mortgage Lender.
Simply, in the event of default, the Second Mortgage holder would only recover his funds from the proceeds
after the First Mortgage was satisfied. In addition to the First Mortgage any Municipal Taxes due, Legal Fees Payable
and all Processing costs would have to be paid as well, before the Second Mortgage lender would receive any funds
to satisfy the Second Mortgage. In some cases of default the Second Mortgage lender may choose to assume the First Mortgage
to protect his interest in the property. This will be not only time consuming but costly for the Second Mortgage lender.

The Interest rates determined by both Institutional and Private Lenders on Second Mortgages will be based on many underwriting criteria.

Credit History of the applicant
Income
Location, Type and Condition of Property
Debts that may remain after the Second Mortgage is in place
The total Loan to Value (LTV): the total amount borrowed as a percentage of the value of the home

In the case of a homeowner who has good credit, stable income, acceptable property, low debts and just requires, lets say,
a Line of Credit. They should have no problem in securing a loan to 80% of the homes current value and should expect an interest rate
close that of a First Mortgage or Bank Prime.

However, a homeowner who may have weak credit, less stable or verifiable income, outstanding issues such as tax arrears or
credit collections may expect to be able to secure a Second Mortgage loan to 65%-85% of the home current value with an interest
rate similar to that of consumer loans.

And finally, a homeowner who simply needs the lender to overlook all the underwriting guidelines and lend the money solely on
the Equity in the home may expect to be able to secure a Second Mortgage loan to 65%-85% of the home current value
with an interest rate similar to that of a consumer credit card.

About the Author:

Know more about Second Mortgages by visitinghttp://http://london-second-mortgage.com//" target="_self">http://http://london-second-mortgage.com/

Article Originally Published On: http://www.articlesnatch.com

Tags: London Mortgage

, London Mortgages

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