Advantages and disadvantages of Second Mortgage

Second Mortgage also known as home equity loan is simply an additional loan against your property. Lenders consider these loans as riskier because first mortgage should be paid so these loans are provided on high interest rates.

ADVANTAGES

• You can get cash easily as these loans are provided on your home equity.
• Funds you receive can be used for any purpose.
• Second Mortgage does not affect your first mortgage.
• You get tax benefit on the interest you pay on the second mortgage.

DISADVANTAGES

• If you default on the payments, the the lender of the second mortgage can foreclose your home.
• Lenders charge higher interest rates as compared to first mortgage.
• You must have good credit scores to be applicable for the second mortgage.