Considering a Second Mortgage? Here’s What You Need to Know

This February, if you’re thinking of ways to tap into your home’s equity, a second mortgage might be an option worth exploring. Homeownership provides the chance to build equity, which can be used for refinancing, home improvements, or securing a second mortgage.

A second mortgage is an additional loan on a home you already have a mortgage on. It allows you to borrow a significant sum with lower interest rates than credit cards. However, these loans typically have higher rates than refinancing and can increase your monthly financial obligations.

Second Mortgage vs. Refinancing

• A refinance replaces your current mortgage, often at the end of your term, to secure better rates or borrow from your equity.
• A second mortgage keeps your original mortgage intact and gives you access to funds without penalties.
• Second mortgages offer flexible terms like interest-only payments or shorter loan periods.

Pros of a Second Mortgage

• Access up to 85% of your home equity
• Lower interest than credit cards
• No need to break your current mortgage

Cons of a Second Mortgage

• Higher interest rates than refinancing
• Adds extra monthly payments

For more information or questions about the real estate market, follow us on social media or reach out at info@crippshomes.com. Contact the #1 Top Choice Real Estate Agency in Barrie for six years in a row — we’re here to help!