Struggling with debt is difficult. When bills keep coming, and you’re trying to stay on top of them, it’s not only stressful, but it can take over your entire life. If you’re having trouble making your payments, debt consolidation might be an option for you.

 A second mortgage can be used to help you get your debts under control and make it easier to meet your financial commitments.

What is a Second Mortgage?

A second mortgage is a lien taken out on a property that already has a home loan on it. It can allow you to take advantage of the equity you have in your home, which is the portion of your loan that you have already paid off.

For instance, if you purchased a home for $500,000 and you’ve paid off $125,000 (including your down payment), you have $125,000 of equity in your home. The equity in your home can also increase if your home goes up in value. A second mortgage lets you benefit from the equity you have built up.

What Can a Second Mortgage Be Used For?

You can use the money from your second mortgage for just about anything. In many cases, people use the funds to pay off their other debts. However, you can pay whatever expenses you have with the money, rather than keeping it tied up in your home.

Is it a Good Idea to Pay Off Debt With a Second Mortgage?

When faced with a lot of debt, many people find themselves asking, “what is a second mortgage?” and wondering if this option can help. While interest rates on second mortgages are usually higher than those on first mortgages, they’re still often lower than many other types of debt. This is especially true if you owe credit card debt since most credit cards charge high-interest rates.

 The way debt consolidation works is that you use another loan to pay off your existing loans. The goal of this process is to save money on interest. For example, if you take out a second mortgage and use the money you get from this loan to pay off your various credit card debts, you could end up paying a lot less in monthly interest. Whether this process makes sense for you will depend on your financial situation, the interest rates on your debts, and what sort of rate you can get.

When Will I Be Able to Get a Second Mortgage?

In most cases, lenders will only allow you to borrow a portion of the equity built up in your home. Therefore, the more equity you have, the more you will likely be able to borrow. You’ll also need to have a good credit rating. The better your credit, the more likely you will be able to receive a loan and the lower interest rate you’ll get.

Your income matters as well. That’s because lenders will want to know that you have a dependable source of income and that you’ll be able to cover the payments on the loan along with your other expenses. The condition of your property may also be important since the home is securing the investment.

EasyMortgageLend.com strives to make mortgage products and financial services accessible to everyone. If you wish to know whether you’ll be able to get a second mortgage or if you’re looking for a low-interest rate for debt consolidation, our professional agents can help. You can call us at (647) 895-3921 or contact us online to speak with a member of our team.