The Loanplace Guide To Getting A ‘Second Mortgage’

August 27, 2019

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Your mortgage is not what you think it is.

It’s not just a debt to the bank that you have to pay off to live in the house you bought.

It’s not just another bill you’ve been dealing with every month since you moved in.

In fact…

It could be your ticket to accessing a pile of extra cash.

Let us explain.

Your mortgage is a measure of how much equity you have in your home.

The more you pay off your mortgage, the more your house belongs to you (and not to the bank).

As you build equity in your home over time, you don’t just chip away at your mortgage.

You create a financial and real asset.

See, you can — if your financials meet the lender’s requirements — use that equity as security for extra cash, or a ‘second mortgage’.

And you can use that extra cash pretty much any way you like; renovations, travel, consolidating debt or buying a new car.

If you’re a homeowner and you’re trying to obtain finance, then listen up.

Your Home Equity Could Be Your Ticket To Tens Of Thousands Of Dollars In Extra Cash

When finance companies and brokers in New Zealand assess your loan application, they’re bound by regulation and law to examine your income and assets. 

That means you can’t borrow more than you can afford to repay.

If you own a home and you’ve been paying off a mortgage, applying for finance could be way easier than you might think.

That’s because having home equity not only shows that you have the income to pay off your mortgage…

It also proves to lenders that you own a valuable real asset.

You have the right to ‘borrow against’ the equity in your home.

In other words, the part of your home that you’ve paid off becomes the ‘security’ for any extra cash you might need to borrow.

Many people use the equity in their first home to borrow the money to buy a second property.

That’s why you’ll often hear this type of loan called a ‘second mortgage’.

It’s also called ‘caveat lending’.

The Reserve Bank of New Zealand limits this type of lending based on the ‘loan-to-value ratio’ or LVR.

The regulations mean you can access up to 80% of the equity you have in the home you live in and up to 65% on a property you rent to a tenant.

So, if you own a home and you’ve been paying down your mortgage…

We May Be Able To Approve Up To An Extra $150,000 For You Using Your Home Equity 

To get an idea of exactly how much extra cash you might be able to access based on your home equity, speak with one of our caveat lending consultants today.

Some common reasons for accessing finance through caveat lending are:

  • Freeing up extra cash to invest in renovating your property…

  • Consolidating or paying down higher interest debts to improve your overall financial position…

  • Financing a second property or business investment …

Generally speaking, homeowners do enjoy a quicker and easier loan application process thanks to the security that owning equity in a home provides to lenders.

But, getting approved for a second mortgage or caveat loan will depend on your unique financial situation and the amount of equity you have available in your property.

So if you own a home — whether it’s your own or one you’re renting out — you may be sitting on a way to access up to $150,000 in extra cash.

To learn more about caveat lending and discover exactly how much you might be able to borrow, get in touch with us today for a free, no-obligation consultation.