What are the differences between a second mortgage and refinancing?

A second mortgage loan allows you to retain your existing first mortgage lender while accessing additional funds provided by the second mortgage lender. On the other hand, refinancing involves paying off your current first mortgage lender and releasing the security. In a refinance scenario, a new mortgage is established to secure a fresh loan facility.

Key differences:

Second Mortgage Loan:

• Purpose: Provides additional funds without replacing your existing mortgage.
• Lenders: You keep your original first mortgage lender (Lender A) and obtain additional funds from a second mortgage lender (Lender B).
• Security: Both Lender A and Lender B register mortgage security on your property title.
• Advantages: Flexibility, reduced income verification, fast settlementy times, capitalisation of payments.
• Considerations: Risk of default and set up costs.

Refinancing:

• • Purpose: Replaces your current mortgage with a new one.
  • Lenders: Your original first mortgage lender (Lender A) is paid off, and a new lender (Lender B) takes over your loan.
  • Security: Refinancing releases the mortgage security held by Lender A. Then, Lender B registeres a new mortgage security.
  • Advantages: Lower interest rates, longer term solution, lower fees.
  • Considerations: Income verification, timing to recieve monies, acceptable loan purpose for the lender.

If you have questions related to second mortgage loans and the suitability for your situation. Contact Loan Saver Network on 1300 796 850 or Apply for a Loan.