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What is a second mortgage
Has the bank said no to providing you with additional finance secured by property you own?
A second Mortgage may be the solution for you.
A second mortgage is one where you have a second loan secured against your property, which sits behind the first mortgage. It’s normally with a different lender than the one you have your first mortgage with.
Second Mortgage loans are often used for business or investment purposes but can be used for funding personal needs.
Providers of second mortgage finance are specialists who are customer focused and fast and efficient when it comes to making decisions. The process is straight forward and in most cases much easier than applying for a first mortgage.
Main stream banks are a great option for most borrowers but at times they can be restrictive in their lending criteria and don’t always appreciate and see the big picture or make decisions fast enough to ensure our clients get the outcome they want.
A second mortgage is a great way to get additional finance without having to meet all the requirements of the bank. Our approved lenders are more interested in the value of the security you can offer, your total debt and how you plan to repay the loan rather than focusing on your credit history and your income which may be variable. Generally the second mortgage provider does not require consent or a deed of priority from your first mortgage provider.
A second mortgage is generally for a short term with flexible terms and interest rates. The majority of loans are on interest only terms or have the interest capitalised to assist with cash flow.
We have assisted clients with second mortgage finance from $10,000 to $1.0M.
As a business owner you have lots of things to manage and take care of on a daily and weekly basis, one of the things that sometimes get pushed to one side is making sure you have saved enough money to pay your tax and GST to the IRD as and when it falls due.
If you get behind on your IRD tax payments the penalty’s applied to the original amount as well as the IRD interest component are very high. In addition to the penalty fees and interest costs the IRD can make your life very stressful in pursuing you for the original principle amount plus all penalties and interest.
We have assisted a number of clients in getting funding approved so they can negotiate with the IRD a one off settlement payment which is significantly less than what would have been paid under a payment arrangement and a significant amount of the penalties and interest costs have been waived.
Examples of clients we have assisted when a Second Mortgage was a good option.
A client wanted to purchase the business they were working in from an owner that wanted out. The main banks said no due to the current business cash flows and the way the main banks view risk. We secured a second mortgage for the client so they could complete the purchase. Cash flows improved with the focus and passion under the new owner and the second mortgage was refinanced with a main stream bank.
A property developer had a delayed settlement on the sale of a completed project but needed to keep the team working and get started on a new project. We were able to source some short term second mortgage funding to keep the wheels of commerce turning.
Building a dream home
Client had good equity in their home in Auckland, they wanted to sell and build their dream home in a smaller town by the beach. Due to limited income and the fact they needed to buy the section prior to selling their existing home the banks were not willing to help. We arranged a six month second mortgage with capitalised interest. A very happy client now enjoying the good life.
Expanding a business
Small business owner with big ambitions needed funding for business cash flow to purchase more stock and warehousing space so they could grow to a medium business. We were able to secure a second mortgage secured against a rental property to allow them to grow.
Expanding a property portfolio
A property investor wanted to continue to grow their property portfolio but was restricted due to the new Loan to Value ratios imposed by the main banks. A second mortgage was a great option as the majority of the clients lending stayed with the main stream banks and great interest rates and a second mortgage was put in place to assist with the purchase of an additional high yield rental.