Second Mortgage Loan

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A second mortgage can raise extra cash, but it's not the only option

If you need extra money for home improvements, to send the kids to school or start your own business, a second mortgage loan can help. However, expect to pay a higher interest rate than on your existing mortgage and make sure you can afford the repayments. Consider remortgaging instead.

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As the name suggests, a second mortgage loan is an additional mortgage that you pay as well as, not instead of, your existing mortgage. It can be a good way to raise money for home improvements or tuition fees, but it's not always cheap: the interest rate is likely to be higher than your current mortgage, and it's important to be sure that you can afford both sets of repayments and that you won't end up overstretched if interest rates rise.

The cost of a second mortgage loan may depend on the reason you need the cash: loans for home improvements are a good bet for lenders the improvements increase the value of the property, and because the loan is secured on the property the lender can't really lose. As a result, a second mortgage loan for home improvements will usually have a lower interest rate than a loan for other purposes.

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