Second Charge Loans Help Homeowners Improve Their Homes
Second charge loans, also called second mortgages, are a good way for a homeowner to do some home improvement projects and fix up their house. This could be used to do things like remodel a kitchen, put in a new furnace, or other projects.
They are called a second charge loan because they are an additional loan that uses your house as security just like your first mortgage does. This means that if you were to default on a second charge loan, you could lose your home, so it’s vital to keep up the payments.
Sometimes a second charge loan has a higher interest rate than your first mortgage, but this interest rate can still be lower than an unsecured loan since the financer knows there is the security of your house if you default on the loan.
How Can You Get a Second Charge Loan?
It’s not hard to apply for a second charge loan. One thing different from a first mortgage is that there seldom are the additional fees like you have to pay on a first mortgage. Plus, there is also usually a waiting period of about 8 days before you sign the papers and get the loan money.
To get a second charge loan, you must have equity in your home. Equity means the difference in what your home is worth on the current market and the amount that is owed on your first mortgage. So, for example, if you have a house worth $50, 000 and you have $25,000 left on the first mortgage, you should be eligible to borrow up to $25,000 on a second charge mortgage.
Know What You Can Afford to Pay
You also need to know what the maximum payment is on the second mortgage you can afford. Do this by creating a budget that lists all your monthly expenses and see how much income is left after paying them each month. This will help you decide what the largest monthly payment you can afford is if you apply for a second charge loan.
The bottom line is that if you desire to do some remodeling, fixing up your house or even just need a few extra bucks to pay off outstanding debts, a second charge mortgage could be the right tool for you. Talk to your financial institution today to apply for a second charge mortgage.