Are you tempted to cash out the equity in your home by applying for a second mortgage? Before you fill up the application form, there are factors to help you decide if getting second mortgages is the right move for you.


The most common uses of secondary mortgage are debt consolidation, home improvements and financing children’s education. You can also use it to boost your retirement nest egg. Take advantage of our low-interest refinancing mortgage to invest in your own retirement plans while taking advantage of the tax benefits and compounding interest.

The proceeds of the second mortgages can be used to diversify your investment portfolio, and safeguard your holdings when housing values go down.

Interest Rates

If you are applying for an additional loan to a property that you already mortgaged, you call it second mortgage.  Simply put, you are replacing your existing loan with a new one; but instead of conveying the property, you are drawing a loan out of your equity in the mortgaged property.

The interest rates on second mortgages are typically higher than first-lien mortgages, because the risk of not being paid in full during foreclosure is high. It is riskier than the first mortgage because the moment you default on your payment, the lender of the principal mortgage will be paid out first.  So, the lending institutions tend to compensate for the risk with a high interest rate.

For example, you took out a loan of $100,000 secured by your home with Lender X. Afterwards, you decided to apply for a second mortgage of $100,000 on the same property, this time, with lender Y. You default on your loan payments, and your property was foreclosed, and sold for $150,000. Lender X, being the primary lender will be paid in full while Lender Y will only get the remaining $50,000.

There are added costs when refinancing because you are breaking your primary loan and you are paying the principal mortgage from another lender. Lender fees, appraisal fees and attorney’s costs may be incurred in addition to discharge dues.  However, the interest rates of second mortgages are comparably lower than credit cards and other unsecured loans.


You have a better chance of getting approved if you have a good credit score, stable cash flow and the financials to prove that you have sufficient income to pay back your loan. But, there are lenders like NSW Mortgage Corp that provides second mortgages to people with bad credit.

We can also refinance part of your debt by paying your first mortgage and add extra cash to pay for your home renovation, investments, car purchase, and personal expenses. We have a special refinancing program that offers debt consolidation, switching between variable and fixed interest rates and locking in better interest rates in the process.

Take a look at our new home loan products designed to help you protect and use the equity you built up for years to finance your needs.

Enquire now and our loan experts will walk you through the quick and easy application process for second mortgages.