Weekly Q & A: Second Mortgage: How Does It Work?

QUESTION: I want to know about a second mortgage on my home, how does this work?

ANSWER: Hi Dennis, Thanks for your question. It’s a good one. Second mortgages are basically just a loan secured to your house that sits behind the first mortgage. Second mortgages can be financed up to 95% loan-to-value depending on your credit score.

Interest rates set by lenders on second mortgages, are often higher than on the first mortgages. Seconds are usually structured as an additional payment on top of your first mortgage payment. However, sometimes breaking your first mortgage and rolling all of your debt into one payment in lieu of a second mortgage, makes the most sense. This helps control the interest and makes the process a little easier to manage. Your mortgage broker will help you determine which would be most suitable for you.

Hope this helps a little. All the best.
Darrin

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