Should you take a second mortgage private loan?
The reality is for many borrowers taking a second mortgage can at times be perceived like a last resort option, that they must take, but don’t want to take! This article will help provide some guidance as to whether you should take it, and what your alternatives are.
The primary rule of loans
Firstly, lets cover a primary rule, the only reason you should take a second mortgage / caveat loan, is because you can use those funds to solve a problem greater than the cost of the loan, or invest those funds with a return that is greater than the cost!
If you’re simply taking the loan to sort out a cash flow problem in your business or investment that is fine, providing the problem is a short term one and not a structural problem. If you have a structural problem within the business and you are putting good money in after bad, then you shouldn’t be taking the loan.
So, what are your alternatives to a second mortgage / caveat loan?
- You can see if your bank will give you a greater equity release.
- You can see if you can refinance with another bank.
- You can take a business cashflow loan.
- You can use invoice financing or supply chain finance to solve your cashflow problems.
- You can refinance your first mortgage with a private first mortgage loan and equity release.
If the pro’s and con’s of each of the above, doesn’t solve your problem, then a second mortgage loan maybe the ideal option for you.
The benefits of a second mortgage loan
- Funds can be provided within 7 business days.
- We don’t require a deed of priority from your bank.
- We mainly look at security and not your financials or credit score / history.
- You deal directly with one investor or family office to fund your deal
- You deal with the decision maker.
- LVRs can go up to 80% inclusive of fees.
For a confidential discussion enquire with us here.
