Do you have any plans of getting your house renovated? Do you plan to remodel your home or want to work on your basement? Are you thinking of ways for arranging money for remodeling your kitchen? You have a number of home improvement options that can help you with your finance improvements.
The financing schemes for home improvement are generally preferred as it is one of the ways of increasing the property value. Whether you want to work on the master bedroom or living room or fix those leakages in the pipes of your bathroom the home improvement finance will do the needful for you.
What do you mean by a second mortgage?
Compared to a first mortgage which already exists, a second mortgage is considered junior. Replacing an existing mortgage with a higher one it will be more cost effective for a borrower if he considers a second mortgage. Take for an example, your house is worth about $200,000 and you have already taken $120,000 as your first mortgage amount. You will be only considered eligible by the bank to take a first mortgage if the credit scores that you have are good enough for financing 80% of the total of $200,000 or $160,000.
You can only borrow $40,000 for your second mortgage when you have subtracted the sum of $120,000 taken for your first mortgage. The amount taken for the second mortgage is taken in public records and it almost becomes a kind of lien against the house.
In case you opt for a second mortgage you have to make a monthly payment additionally. So before you choose a second mortgage option it’s better to analyze the monthly expenses as well as obligations so that you can be sure of handling a new payment. Along with this, the risk involved should also be kept in mind. You have risked your home, so if you think you would be able to repay the mortgage amount then only go for the loan.
Benefits of a second mortgage:
A second mortgage comes along with a few innate benefits. Since it is based on the home equity, it is quite beneficial for a home owner as the funds are readily available. It is also considered a more secured loan and one can obtain it more easily compared to other loans. The interest that you pay on any second mortgage is even tax deductible. It happens to be one of the biggest benefits that do not usually come with other loans. You can easily deduct interest payable on your second mortgage from the taxes.
So when it comes to home improvements a second mortgage is always the best option to finance it. Since the interest rate is a bit low you can be very confident of repaying your loan. Moreover renovating your house may not call for a huge sum of money compared to what it goes in purchasing a new one. But it is not that less that you can pay it with the amount that you have in your savings account.
The option left to you is that of a second mortgage which is more secured and thus preferred. There are even many buy to let mortgages options that allows the investor to borrow a sum of money for purchasing private rented sector’s property that they further give it on rent to tenants. Since late 1990s this has been a very popular practice in UK.
Financing your home improvements have become easier with the second mortgage option. You can be rest assured of getting a secured loan and thus concentrate on giving your home a new look.
Jonny Pean is a finance expert by profession. He finds immense pleasure in writing financial blogs with a special mention to buy to let mortgage option and Mortgage calculator from emortgagecalculator.co.uk.