A Second Mortgage

A second mortgage is an additional loan taken out on a property on which there is already an outstanding mortgage. The loan is, like the mortgage, secured on the value of the property.

You might want to do this to pay for redecoration, or to help you start a business. There are several things you need to know about taking out a second mortgage. To begin with, from the point of view of the lender, this is a higher risk than the initial mortgage. Therefore, you will usually pay a higher rate of interest on the additional money than you did for the initial loan.

If you’re the sort of person who might just face a bit of a shortfall every now and then, you might want to consider flexible accounts many lenders allow you to take payment holidays; this could be significantly cheaper than a second mortgage. Alternatively, try getting a 100% mortgage in the first place- it’s not cheap but it’s cheaper than a second mortgage.