A Second Mortgage
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If you would like more information, or you just want to check to see if we can provide a better non bank proposal, use our online enquiry form or contact us on:

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What is a second mortgage?

As a result of the stream of visitors to our website www.nonbank.co.nz, which focuses on Non Bank Home Loans, Mortgages and Finance, and the numerous enquiries regarding a second mortgage, the site www.asecondmortgage.co.nz has been launched, as a simple one stop shop for information on a second mortgage. Like the parent site, this is all about providing information, with a contact email and on line enquiry form to apply for a second mortgage or to answer any questions.

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As the name suggests a second mortgage is a mortgage which is registered against the certificate of title or ownership papers to a residential home, lifestyle property, farm or commercial building. This can also include bare land, from a small section to many thousands of acres. It is though, a second mortgage, so there will be always be a first mortgage on the property. The first mortgage will often be through a Bank at a low rate and over a longer term, a second mortgage is usually at a higher rate, short term and can have lender and broker fee attached, plus some legal costs.

A second mortgage will therefore be a temporary fix to a funding requirement that a Bank is unable to assist with, or timing issues require a quicker response, with less conditions, than what a Bank can provide.

Because of the wide scope of uses for a second mortgage, we have arranged loans from $10,000 to consolidate debts with bad credit, through to $300,000 to assist a developer with working capital until titles were issued on a subdivision.

For a lender, a second mortgage is secured behind the first mortgage, so they rely on equity left in a property after deduction of the first mortgage debt. As an example if a property is valued at $600,000, with a first mortgage loan of $350,000, there is $250.000 of equity remaining. As a lender will always allow a safety buffer in case of a mortgagee sale, they may lend up to $100,000 against this, so the total lending secured by the property is $450,000 or 75% of the value.

A common question is why are the rates higher than a Bank and the answer is that second mortgage is priced on risk. The risk is higher, as when a property is sold, the first mortgagee always has first access to sale proceeds, before a second mortgagee. Sometimes, when a property sells under mortgagee sale conditions, or is in a run down state, it can sell at a discount and the second mortgage lender may not recover their entire loan and incur a loss. They can then take action against you personally to try and recover any amount outstanding.

If you have any questions about a Second Mortgage please complete the form below or email solutions@nonbank.co.nz

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