Fixed Rate second MortgageFix interest rate second mortgage
You can refinance your mortgage for accessing your own funds (without modifying your first mortgage ) in two main ways: a fixed-rate mortgage or a Home Equity Line of Credit (HELOC). An interest-bearing second mortgage is also known as a homeowner's credit. Whilst you are expecting to repay the borrowed amount in monetary installments for a certain number of years, you will get this cash at a fixed interest rate.
Conversely, a home equities line of credit is similar to a debit line of a credit or debit, where the amount you can lend is based on your previous borrowing and your earnings, and money is taken out of this line of line of sight, disbursed and then repaid.
If you are refinancing with a second fixed rate mortgage, the interest rate is fixed so you do not have to be concerned about making voltage rises along the way. As this is considered a second mortgage, the interest rate on it will be higher than your usual first mortgage, but lower than a HELOC.
In HELOC's case, the amount of interest you will pay will be pegged to the base rate and will vary with the markets, meaning that you will end up with a higher amount of interest than you have negotiated. Whilst the refinance of your mortgage can seem like a great chance as you will be able to get yourself with a fixed interest rate, it is noteworthy that the way you are calculated is different.
Mortgage refinance will calculate interest on the entire amount of your mortgage, while a HELOC will only ask you to interest on the amount of cash you withdrew from it, so you want to consider which options work best for you. There are advantages and disadvantages for both when it comes to obtaining a second mortgage or opening a HELOC, and these should be taken into account before dealing with both.
Because they can jeopardize the safety of your most important asset, you will want to consider what works best for you. For more information, if you are interested in other houses near you or if you are considering down-sizing, please consult one of our mortgage experts.