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How Much Can I Borrow with a Second Mortgage?

If you have built up some equity in your home, then one way to access extra cash when you need it is through a second mortgage. With a second mortgage you can borrow up to 80% of the equity in your home.

How Much Can I Borrow with a Second Mortgage?

What is home equity? 

The amount of equity you have in your home is the current value of your home minus what you owe on it. So, if your home is worth $300,000 and you owe $200,000, then your home equity is $100,000 and you’ll be able to borrow up to $80,000 with a second mortgage. 

Your home equity can increase in two ways. The first way is by paying down your mortgage. The less you owe on your first mortgage, the more equity you will have to borrow if you decide to take out a second mortgage. 

The other way that home equity increases is by your home value going up. If you bought your home for $300,0000 five years ago, there is a good chance that it is worth considerably more today. That’s why if you are going to get a second mortgage, it is a good idea to have your home appraised, because you may be able to borrow more than you think you can. 

Advantages of getting a second mortgage.

Second mortgages are one of the more affordable types of debt. Although the interest rate will be higher than that of your first mortgage, it will still be considerably lower than unsecured debt such as credit cards or personal lines of credit. 

And since second mortgages are based on how much equity you have in your home and not your credit history, they can be a good option for people who may have bruised credit. 

Drawbacks of second mortgages.

Of course, getting a second mortgage is not for everyone. Since you are using your home to guarantee your loan, you risk losing your home if you become unable to make the payments. For this reason, it is always a good idea to sit down with a professional mortgage broker who can help you determine whether a second mortgage is right for you. 

Additionally, you should be aware that there are certain fees associated with getting a second mortgage including appraisal, legal and title search fees. 

Find out if a second mortgage is right for you and how much you can borrow: 

If you are curious about whether a second mortgage is right for you and how much you would be able to borrow with one, contact Matrix Mortgage Global today. A member of our team would be happy to review your options with you. 

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