Understand Advantages & Disadvantages Of A Second Mortgage

A second mortgage on your property is a second loan taken against the property utilizing the equity in the home. Equity is calculated by understanding the current value of the home and the outstanding balance on the original loan. The positive value that is the difference between the liability on the original loan and the current value of the home is considered as the equity in the home. It is this value that can be accessed by the second mortgage loans. Here we see the advantages and disadvantages associated with second loans. Rules in different places might differ, hence if you are in Ottawa, you should understand the terms and rules pertaining to mortgagecwf in Ottawa before taking a second mortgage on your property.


Second mortgage loans will make it possible for the owner of the home to access a large amount of money. The mortgage interest rates are often less than the credit card rates or other personal loan rates. The borrowed money can be used for any purpose like redecorating the house or for other personal purposes. The most common purpose of the second mortgage loans are for debt consolidation and home redecoration. It is much easier to pay off the debt if it is consolidated at a single place. This will make it easier to maintain regular payments.

Most of the reputed banks offer second mortgage loans and hence there is no necessity of going to the shady personal loan lenders or other unknown financial institutions. The banks are obliged to provide the borrower with a detailed summary of all costs and charges incurred along with the monthly payments expected. This will make sure that there are no hidden costs associated with the loan.

One important benefit of taking a second loan on your property as against credit card loans or personal loans is that the interest paid on the loan is tax deductable. This is not the case when you take a loan on your credit card or an instant loan.


Getting a second mortgage loan will be more difficult than the first loan. The application fee and the appraisal costs have to be paid upfront by the borrower with the possibility of the loan request being rejected. Lenders think of the second loans as more risky and hence deliberate carefully on approving second loan requests. This is because the second loan lenders are considered ‘secondary’ in case of lien (if the owner files for bankruptcy or the property is foreclosed by the first lender). Hence the lender can get access to his dues only after the primary lenders are paid off.

The chief disadvantage when you are considering a second loan is that there are higher chances of defaulting on payments. The top risk associated with second loan is the risk of losing the home. Making two mortgage payments (the new loan in addition to the existing original mortgage) every month will put more pressure on the borrower and a lapse might lead to the home being foreclosed. It will also place a bad mark on the credit history and make further borrowing even more difficult. Even though secondary mortgage loans are considered safer and come with lesser interest rates than the instant cash loans and other credit card loans, you should think twice before taking out additional loan on your home.

Author Bio:

Angela Rose asks you to go through the obligations of secondary mortgage and look for mortgagecwf in Ottawa while going for second loan.

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