Can I use a second mortgage for debt consolidation?
March 11, 2024What are the differences between a second mortgage and refinancing?
March 11, 2024The required equity for obtaining a second mortgage depends on the type of security involved. Generally, the following guidelines apply:
- Residential Properties:
- Equity Range: Typically, lenders prefer homeowners to have 20% to 30% equity in their residential properties.
- Loan Ratio: You can often borrow up to 70% to 80% of your home’s value (LVR), less your existing first mortgage loan.
- Vacant Land and Commercial Property:
- More Equity Required: If you’re seeking a second mortgage for vacant land or commercial property, more equity is usually required due to the perceived risk and reduced saleability associated with these types of assets. Therefore you could expect 55%-70% LVR against your security depending on the type of asset and location.