A second mortgage (sometimes just called a “second”) is when you take out a home loan against a property that already has a mortgage on it. When you get a second mortgage, you use your home as collateral to gain access to cash locked up in the value of your home.

You can use this money to pay for nearly anything, which is why many homeowners apply for a second mortgage.

With a home equity loan, you get your money in one lump sum. You then pay back what you borrowed over an agreed-upon term with fixed payments. This is a smart option if you know exactly how much money you need to borrow or prefer receiving all the funds at once.

Let’s look at the pros and cons of a home equity loan:

A HELOC is like a credit card, meaning you have a set credit limit where you can borrow as much or as little as you need. However, unlike a credit card or a home equity loan, this type of second mortgage has two time periods:

Drawing period: During this time, you can withdraw whatever amount of money you want (up to your limit), making monthly interest payments only on what you borrow.

Repayment period: Requires repayment of the principal and any interest on the amount you borrowed. Borrowing is no longer allowed at this time.

The pros and cons of a HELOC:

Second mortgages give you a wealth of options for using the money and how to repay it. Contact us today for more information and to quickly get access to your home equity.