There is a general increase in the trend of people seeking mortgage loan from the second home mortgage lenders. They are o course insisting that you show a decent cash flow in your bank statements before you apply for the second mortgage.
You would need to submit the entire financial history of your first loan as well as the rentals from the beginning. Based on your submission of certified statement, the banker will then conduct his own appraisal and inspection too. If your property records are in order and the value of rentals is good, they would consider into account part of the rental income being available for repayment and accordingly offer a second mortgage.
The second mortgage loan works on the same lines as any home loan. The tenure of the loan varies from ten to fifteen years on an average. However should you wish, you can opt for a smaller tenure of five years and accordingly offer to pay higher monthly instalments. Alternatively you can even choose to make quarterly or annual payments too.
In most of the second mortgage loan cases, the company lending you the money charges a transaction fee. Called as points, the fee happens to be calculated as a percentage of the total loan amount converted into the number of points. The total amount of points charged varies from company to company and can be negotiated depending upon the loan amount.
Before you accept the loan sanction and execute paper work, you should find out the legally permissible service charge that would be applicable to your loan amount and compare it with what the company is charging you. Secondly you can write it off in your balance sheet as an expense at the end of the year, subject to approval from your chartered accountant.
With a second mortgage application, you should expect it to be a lot tougher in terms of stringent conditions and scrutiny for the companies do not generally find second home buyers to be forthcoming easily.
Normally you will find the companies trying to charge you higher than the normal fee in terms of points for your second mortgage loan. This is because they feel that you can easily afford to pay.
Banks are relooking at the real estate market which has just been revived. They are again targeting to invest into the sector and hence would want to service both primary as well as second mortgage customers with the same priority least they miss out on an opportunity.
Besides real estate, the author additionally frequently gives advice regarding second home mortgage and commercial real estate auctions.