Can you refinance second mortgages?

It is possible to refinance second mortgages, but it's not the same as refinancing your first mortgage. If you only have one mortgage, you have more financial leeway and it's easier to shop around for a better deal on your mortgage. However, if you've taken out a second mortgage, you have fewer choices open to you, and those choices all depend on the terms of your second mortgage and the reasons why you took out a second mortgage in the first place.

What is a second mortgage?

There is some confusion about exactly what the term "second mortgage" means. Some people use it to mean a revised version of their mortgage, particularly when they have obtained the new mortgage deal from a new provider. However, on this site, we use the term to mean a mortgage that is in addition to your existing mortgage, whether or not you stay with the same provider. In other words, a second mortgage means taking on more debt than you had before. Taking a second mortgage is also known as getting a further advance on your mortgage. It's a little like getting an advance on your wages - you get more cash in your hand in the short term, but you have to pay off the debt eventually.

Getting a good deal when you refinance your second mortgage

The deals available to refinance second mortgages usually aren't as good as the deals for refinancing your first mortgage. However, each individual case is different. Start by looking over the paperwork and re-reading the terms of your second mortgage. Is there a clause that commits you to that particular deal for a certain period of time? If so, when does that period expire? If you know how long you are tied to your second mortgage deal, you can start shopping around for a new deal well in advance. That way, if you find a better deal you can switch to it as soon as possible, and you don't miss out on any potential savings.

Unfortunately, the more you need favorable terms on a second mortgage, the less likely you are to get them. If you took out your second mortgage to repay your credit-card debts, you probably had to commit to a fairly high rate of interest for a comparatively long period of time. This means that you're unlikely to be able to shop for better deals.

If you're looking for a better deal on your second mortgage because you have experienced a reduction in income - perhaps because you have lost your job - you may be able to arrange to pay less money in the monthly repayments on your second mortgage. However, this temporary reprieve usually comes at a price - after a certain period of time, you'll have to start paying more, and in the long term you will pay a lot more money on your second mortgage in order to pay off the full debt.

However, if you have no credit-card debts and took out your second mortgage in order to finance home improvements, you're better placed to refinance your second mortgage. This is partly because you will have a better credit rating, but also because your home improvements may have increased the value of your home, which would mean that you have more equity to release.

Before considering any mortgage option make sure you sue a mortgage calculator to figure out how much your monthly payments would be and how much the total debt will be. Make sure you factor in all considerations on each debt or find an advanced mortgage calculator that can do this for you.

Should I refinance my second mortgage?

You should think very carefully before refinancing your second mortgage. If your second mortgage is already charging you high rates of interest, and you can save money by moving your second mortgage elsewhere, that is a good move, provided you really are saving money in the long run.

However, many people refinance their second mortgage in order to borrow more, rather than with the intention of saving money. Having a second mortgage is usually a sign that you're living beyond your means, and refinancing it to borrow more just means that you're getting deeper into debt. When you're considering refinancing your second mortgage, you need to have a realistic plan for repaying the money before you take the plunge.

 

 

 

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Mortgage Refinancing

> Introduction
Re-evaluating your mortgage
> Mortgage refinance
> Refinance mortgage rates
>Refinancing calculator
> Interest only
> Refinance company
Getting a second mortgage
> Refinancing your home
> Home refinancing
> Refinance second mortgage
> Second mortgage
> Bad credit refinance
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