Refinancing, Second Mortgages, and Remortgages

 Refinancing, Second Mortgages, and Remortgages




For most homeowners, their house is their greatest asset. When an emergency comes up, therefore, it's also where they turn; why take out a high interest loan when you can borrow against your equity? Of course, the danger in doing so is that you put your house on the line if you can't make the payments, but for people with stable income who are experiencing the need for extra cash, this can be a good option.

Generally there are three options for taking money out of your home. A cash-out refi lets you renegotiate your current mortgage, hopefully dropping the interest rate, and borrow more than you currently owe. A second mortgage is an additional loan against the house; generally these will have higher interest rates because the bank that holds the second note has to get in line behind the first lien holder for payment if you default. A remortgage is similar to a refi, but with a different bank; the new lender pays off your first mortgage and returns any additional cash to you, allowing you to draw down equity. With a remortgage, you never have two mortgages out on the house, so they're easier to quality for and provide a lower interest rate than a second mortgage.

To qualify for a remortgage, you'll need the same paperwork as you did for the first mortgage: tax statements, pay stubs, a reasonably good credit rating; basically everything to prove that you're likely to continue making the payments on your loan.

You can read more about remortgages and bad credit remortgages at twentiesretirement.com. Find out if a remortgage is right for you!

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