Pros and cons of the 2nd Mortgage

• clear debts that have high interest rates attached;

• secure capital to help their family or business;

• finance major renovations to their home;

• make consistent monthly repayments that could be set up on the same schedule as their first mortgage; 

• most of private lenders offer Interest Only payment.

BUT

• due to a greater risk for the lender by being in the second security positionan,  equity take out loan in the form of a second from a private lender will likely be at a higher interest rate for a lower loan amount vs. a first mortgage with a traditional lender.

• the borrower needs to consider additional expenses, such as closing costs and appraisal fees, which may need to be paid upfront.

• exit strategy that the borrower needs to come up with as a short mortgage solution.