What Is A Second Mortgage?

You may dislike the idea of borrowing money from your bank and living under indebtedness, but life can surprise you with sudden emergencies.  Some emergencies, unfortunately, cannot be tended to without taking an additional loan.

This may sound burdensome, but it is possible to borrow a second mortgage on your house – even when you did not pay off your first mortgage completely.

A second mortgage can be beneficial when you need to tackle some unplanned costs like home renovation, college tuitions, weddings, or business trips. A second mortgage, however, will possess the same risks as your first mortgage.

Your second mortgage will charge you high interest rates because your lender will only get their money back after you have paid for the first mortgage. This also helps safeguard the lender in the event of any default leading your home into foreclosure.

Basic Types of Second Mortgages

Second mortgages can become harder for you to pay off, especially when you are bearing the liabilities of the first one at the same time. It is easier to cash out the mortgage loans but paying it back can land you into some serious financial strain.

We will advise you to go through all the available options carefully and choose the right type of second mortgage to meet your needs.


HEL is the same as any other standard loan in the market which is predictable and easier to understand. Hel is a good option for borrowers who dislike dealing with variables and uncertainties.  

Under HEL, you will receive the loan in a lump-sum payment with interest at a fixed rate. The principal amount along with the interest rate will be paid in regular monthly installments, just like your first mortgage.


HELOC is an unconventional loan scheme that allows you to borrow against the line of credit available to you via your equity. With a HELOC nothing is fixed, and the interest rate of your loan can increase or decrease any time.

Under this category, you will be introduced to a pool of cash which will permit you to transact the amount in smaller portions as needed. Once you have crossed your credit limit, you will be denied access to this cash and cannot borrow more unless you have paid off the half or entire balance back, just like your credit card bill.

How Can You Get a Second Mortgage?

When you already have the liability of the first mortgage, the lender might not be happy to lend you money for the second time. Therefore, you should plan carefully before meeting with your lender.

First, think about the amount of money you want to borrow and decide the length of time you need it for. In the next phase of your loan acquirement, think about the purpose of your loan to understand which option you should go for.

If you are borrowing the second mortgage to pay for your business trip or to tackle a debt consolidation, opt-in for HEL equity loan. If you are interested in paying for your marriage ceremonies or college tuitions, HELOC will serve you better.  

Read your credit report and check if your credit score is impressive. If your credit score is declining, chances are higher you will not get the loan. To improve your score, you must pay off your debts for the first mortgage regularly and update it on the credit report.

Your lender will ask for your income statements and would also like to see your assets. So be prepared with documents like pay stubs, tax returns, bank statements, and other documents that are relatable to your mortgage deal.