Requesting a second mortgage or extending the one you are already paying are two ways to finance different life projects or complex financial situations. Sometimes we use these two terms synonymously, but they really are totally different options with different goals.
Next, we are going to tell you what the differences are between requesting an extension of the first mortgage or requesting a second one, so that you can choose the best financial decision for your pocket.
When should we ask for a second mortgage?
Applying for a second mortgage may seem strange or risky, but it is common for those who can afford it . When we talk about a second mortgage, it is because you are currently paying a first mortgage, mainly intended for a home considered as a first residence.
Therefore, a second mortgage is a new loan that has nothing to do with your first mortgage and that has new conditions in terms of interest , terms or amount. This loan is used to buy a second home , usually they are houses on the beach or rural, which are used during vacations or weekends in order to escape a little from the stress of the city.
If your financial health is good, it is not at all a bad idea to take out a second mortgage to buy a second home . Of course, you should know that the demands to be granted it are much higher. Surely you can only finance between 60 and 75% of the total cost, you will have shorter terms and higher interest rates.
In short, it is not only an investment for your current use and enjoyment, but also a possible way to get a return on your savings in the near future.
First mortgage extension When can it be requested?
If you have financial problems, want to make a reform in your home or need money to open a business, then extending a mortgage may be a good option. To do this, we must obviously have a loan with the bank that corresponds to the purchase of your main home , where you usually reside.
To extend the mortgage, you must tell the bank the purpose of this decision. This will study your possibilities and inform you if it is possible or not. The money that you will obtain will be added to the loan that you already have pending under the same conditions. However, you will not pay a higher installment, but you will have two installments, the usual one and the one for the mortgage extension.
This financial operation is called novation and is a good option for those who want to clean up their economy. It is also possible to extend the terms of our mortgage in order to pay less each month and thus be able to be more comfortable.
On some occasions, you can also request a mortgage extension to buy a second home . This usually happens for two reasons: either you have good savings but you have a little more time to buy this second home, or they do not grant us a second mortgage and we must go to the extension of the first one.
Apply for a second mortgage or extend the loan of the first?
To make the right decision, you must analyze your financial situation very well and study the most favorable option according to your objectives. Each case is a world, so both options can be valid for you. Our advice is that you study in depth the different existing routes and choose the one that best suits your needs. If you are still not able to solve doubts, then you can consult one of our experts which is the best option for you.