All Topics / Finance / please explain what is a Second Mortgage
can some body please explain what is a Second Mortgage
Best explained with an example?
eg Your house is worth $100,00. Your borrow 80% ($80,000) from the CBA – this is the first mortage, and then you borrow some more money from your father in law, say $10,000. This is secured by your father in law taking out a second mortgage.
If something goes wrong, CBA will come in and take possession. Since they have first mortgage, they have first priority. They sell the house, and your poor old father-in-law gets his $10,000 if there is anything left over.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
If nothing left, he gets nothing?
I understand that the first mortgagee is only interested in recover their loss.
What if the father in law had registered as a secound mortgagee or had put a caveat on it?
Does it protect his investment money?Hi,
Well, if there are no funds available then there is insufficient security to underpin the loan.
This doesn’t mean that the debt ceases to exist, it’s just that there was insufficient collateral to repay it.
The 2nd mortgage holder would then seek to have the money repaid by other means through perhaps a debt collection agency.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Well, if there are no funds available then there is insufficient security to underpin the loan.
This doesn’t mean that the debt ceases to exist, it’s just that there was insufficient collateral to repay it.
The 2nd mortgage holder would then seek to have the money repaid by other means through perhaps a debt collection agency.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
I agree with all that has been posted based on 2nd Mortgages, Somtimes however it might be an idea to have a look at short term Bridging whilst you seek alternate refinance on an investment property.
With the recent Property Boom that has happened through out Australia Properties have gone up considerably in value, banks have put the breaks on as clients were borrowing past there limits as in above there affordability range, but taking into account that you might have a property worth $750,000.00 becasue of past property boom but have a maximum mortgage over it that only sits at $300,000.00 because that is you maximum lending potential based on your current income level, You have $450,000.00 of funding stuck unless you sell…. (NOT)
What the Banks miss on is that Asset lending , leveraging is how investors make money, yes there is a risk involved that we can over extend ourselves and run thin at times but it takes carefull planning and obvious risk associated to make that initial million dollars.
I have come accross numerous Banks that have stiched up clients that have more than 5 properties because they say that they have reached there lending limit but there is always an alternative out there.
Bridging can sometimes be an alternative, Funding immediatly, Risk you loose the asset and have to start again….
Instant Simple and flexible Lending
Why do you say banks have put the brakes on? I am finding them keener than ever to do deals?
I also suggest that a short term fix at 5% per month can easily turn into a very expensive millstone should things not pan out. Far better to sell an asset than get stuck with a mortgage annualised at 100% pa.
Please be careful folks when considering this type of finance and ensure you exhaust all other options and seek independent advice.
Cheers,
Simon Macks
Residential and Commercial Finance Broker[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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