In some cases, credit consolidation involves the taking of collateral on the part of the new lender. The second mortgage is one of the most solicited guarantees. Here is his instructions.
Mortgage Loan Buyback: The Second Row
As part of a loan buyback, the second mortgage guarantee allows in certain cases to preserve its home loan or other loans at advantageous rates (PTZ, PAS, home savings loan) without including it. to the transaction, but using it to secure the financing used to prepay the creditors. As a result, the bank that finances the loan consolidation agrees to rank second behind the priority lender (first mortgage). Thus, the new lender leaves the initial home loan in place and consolidates or repurchases the other outstanding by guaranteeing itself behind the first bank. In the current context, second mortgage collateral is frequently used by lenders in loan consolidation. Namely that this possibility is exclusively reserved for borrowers with at least one mortgage financing in progress, but it concerns all types of repurchase of credit (real estate, consumption).
Why opt for a second mortgage?
Getting a loan (real estate or consumer) the second mortgage can have different motivations such as:
- Maintain outstanding loans at favorable rates in a loan consolidation
- Get financing for a new project without touching the mortgage guarantee of your home loan
- Take advantage of the advantageous conditions paid to homeowners as part of a purchase of credit for homeowners.
For all these reasons, the second mortgage seems to be one of the preferred solutions to guarantee to finance with limited risk for the borrower. In fact, by intervening only on consumer credit, this coverage facilitates the granting of a new loan over a repayment period of up to 15 years (see more) and at competitive rates.
Mortgage: some tips for getting a second rank
For a lender, being in the second position is a very risky situation, especially in the case of default. To minimize risks, financial institutions require certain conditions.
- First, the mortgage ratio, the capital remaining due on the value of the property, must below.
- Then, the borrower should not have a rejection on the outstanding property held.
- Finally, the debt ratio must remain reasonable according to the resources of the borrower and the amount financed is limited compared to a conventional mortgage loan.