How to get a second mortgage
Firstly it is important to establish the definition of a second mortgage. It is not a mortgage to buy another property or a buy to let mortgage. A second mortgage is exactly that – it is an additional mortgage on the property that you already have a mortgage on. You may own your home currently which you have been in for a number of years.
In that time the value of the property should have increased and with it your equity. At some stage you may find yourself with a need to unlock a larger sum of money. By releasing the equity in your home you can refinance and apply for a second mortgage.
What can second mortgages be used for?
The primary reason for applying for a second mortgage could be to make major improvements to your home. You may need more space and not have the ability to move. If you have a growing family you may want to extend or go up into the roof with a loft conversion.
This is a good use of a second mortgage because you will undoubtedly add value to the house. In fact talking to an estate agent about this will give you an idea of what value you could achieve by making particular improvements. There may be other reasons for wanting a second mortgage like financing university for your children or consolidating debts although this option is like a secured loan as opposed to a personal loan and shouldn’t be entered into lightly.
How much can I borrow?
This really depends on a number of things. Most lenders will only lend up to a maximum value of around 80% of the value of the property. If your property is worth £300,000 and your existing mortgage is currently £180k you will have £120k equity in the property.
If you were to take out a second smaller mortgage you could refinance up to 80% loan to value which is £240k meaning that you can borrow a further £60k. This is a large enough amount of money to finance a good extension or home improvement or any other of the reasons that are acceptable to lenders. Beware though that your reasons for wanting to unlock capital from your home will need to be strong otherwise lenders will not consider it.
What do I need to do?
As with applying for a first mortgage, a second mortgage is just as much as a risk to lenders and it is secured against your property. You will need to go through the same process as you did when applying for your first mortgage and be able to prove earnings and affordability. Lenders will only lend money to those that can afford to pay it and you may only be able to borrow a proportion of what you ideally would like.
You also need to ensure that you are getting the best deal on your second mortgage. Because of the risk involved and the amount of products available in the market as with any mortgage it is really important to seek professional advice so that you can get the deal that best suits your needs and circumstances. That is where we come in. With our knowledge and expertise we can advise and arrange your second mortgage for you.
Our Second Mortgage Service
Special features of what we offer include:
Get the best second mortgage deals in the UK
Whole of market service - we work with most UK lenders
Access to leading market mortgage rates
Access to exclusive loan deals not available on high street
Fast turnaround - speak to us today if you need to move quickly
We have lenders who will take into account previous defaults and missed payments
Looking to raise additional finance on top of your existing mortgage or buy to let mortgage? - we have access to a range of finance solutions
To investigate your second mortgage options call our mortgage team on 0117 403 4474 or fill in our call back form.