Second Mortgages

What is a second mortgage?

A second mortgage is when you take out another mortgage on your home. This can be, for example, if you have one mortgage and you want to borrow more money, but the bank will only lend that money to you at a higher rate. You don't want to have your original first mortgage go up to that higher rate, so you take out a second mortgage at that rate which tends to be smaller, and you end up with two mortgages.

What are the pros and cons of a second mortgage?

The advantages of getting a second mortgage can be that your bank will lend you some more money - which you may need to secure against your home - so you can build an extension or buy another home etc. The disadvantages of a second mortgage are that it can be difficult to shop around for a better deal, because most mortgage lenders don't like to lend money on a home with another lender, because then if the home has to be repossessed because one mortgage isn't paid back they can have serious problems.