Buying a second property with the idea of letting it can benefit you in two major ways. The first of course is that if you have done your homework correctly then it can bring in a substantial income. The second is that there is a long term accumulation of capital growth associated with them.
However when it comes to taking out a second property mortgage there are many pitfalls that you can come across and you need to have some knowledge on the subject if you are to avoid stumbling into one of them.
Second property mortgages generally aren’t as simple to arrange as the normal first mortgage and many factors have to be given some serious consideration if you are to get off on the right footing. While you can search for and deal with your second property mortgage yourself, this isn’t the advisable way to go or the best. The best way to go is by choosing a specialist broker, this ensures that you will get the best deal that is currently available as the broker does all the hard work of searching for you.
However you should also bear in mind that buying a second property with the intention of turning it into an income is not easy. When you consider this option it is often far more risky than other investments, it can be very time consuming and is complicated even with the help of a mortgage broker. But on saying this it can be a very rewarding experience financially over the long term, providing you are willing to wait to start reaping the benefits.
When taking out a second property mortgage one of the biggest considerations that you will have to take into account is your primary objective for the property. When it comes to letting the property you will have to know if the main objective is for capital growth or income. In plain English this means are you seeking to get an income on a month to month basis or looking to gain from increased equity over a period of time?
You should have course taken into consideration the fact that besides the monthly mortgage repayments you will also have other out goings to pay, additional costs include the upkeep of the property, legal insurance and insurance such as contents and building and replacing furnishings and appliances.
As you can see owning a second property to gain an income is complex and this is more than enough reason why you should choose a specialist broker to take care of the mortgage part of the venture.
By: Sean Horton
Posts Tagged ‘Mortgage Broker’
Are You Thinking Of Taking Out A Second Property Mortgage?
December 23rd, 2009Second Mortgage Fee Restrictions in Maryland
December 3rd, 2009
The past five years has witnessed the institutionalization of sub-prime lending, with the locus of sub-prime loans shifting from small, independent lenders to large mortgage subsidiaries of banks (particularly national banks). Investment banks and their affiliates increasingly are not only underwriting sub-prime securitizations but originating loans in sub-prime loan pools as well.
Because sub-prime loans are generally more expensive than traditional prime loans, advocacy organizations nationwide are urging tighter restrictions on these types of loans. However, sub-prime loans are intended for borrowers who pose a greater risk to lenders, typically because of the lack of credit or previous credit problems. And, without the sub-prime segment, an increasing number of borrowers wouldn’t be able to secure purchase loans or cash out on their home equity with a mortgage refinance or home equity loan (second mortgage).
Like California, the state of Maryland is imposing excessively strict predatory lending laws including the imposition of a max 7.99% annual percentage rate (APR) limit which is lower than that of other states. Maryland also has a finder’s fee law that limits the fee a mortgage broker’s finder’s fee to 8% of the total loan amount brokered, and limits the fee on subsequent loans on the same property in a twenty-four month period to 8% of the amount by which the subsequent loan exceeds the initial loan.
Now, Maryland’s Montgomery County is in the news for its new predatory lending law that has at least 50 national and local lenders making a mass exodus out of that county due to the law’s vague language and exorbitant fines. Weighing the unknowns of the law, many financial companies have preferred to exit the market, meaning it could become increasingly difficult for consumers to find a lender for mortgage loans. Financial officials have said the law could make it difficult to find fixed-rate loans for many of the median-priced to more expensive homes in the county, since many of the lenders that bought such loans on the secondary market decided to stop doing business in the county. “The fixed rate conduit market has basically dried up because of this law,” said Kathleen M. Murphy, president of the Maryland Bankers Association.
This new Montgomery County law is on hold until November, which is a welcome relief to lenders and mortgage brokers as well as consumers seeking purchase loans, mortgage refinancing and second mortgages.
By: Maria Ny
Helpful Tips On How To Refinance A Second Mortgage
November 25th, 2009
Today, home refinance has been a hot area for lenders and homeowners alike. With much lower interest rates, it only makes sense to refinance a home mortgage that you’ve been paying on at 10% interest. These lower rates are also ideal for many to refinance a second mortgage. Here are some tips and things to consider with a second mortgage refinance.
Why Consider Refinancing a Second Mortgage?
Of course, getting a lower interest rate is a big part of it, but there is another important reason as well. You will find that in most instances you can refinance your second mortgage for the same monthly payment you currently have, but for a much shorter loan period.
Getting a 10 year second mortgage for what you were paying on a 15 year loan makes good financial sense. Refinancing a high interest rate second mortgage will save you a lot of money over time.
One of the keys in to successfully refinance a second mortgage is finding the right lender or mortgage broker. Look for a lender that will take the time to explain all the details to you. This is in addition to finding a lower interest rate and much more favorable loan terms.
Finally, know upfront what you can expect in refinance closing costs. The last thing you want at your loan closing is a huge surprise in unexpected fees or costs. A good lender will go over all costs with you before closing. And if they don’t, start looking for a new one.
You can find lenders who specialize in second mortgage refinancing online at many different websites. You’ll also be able to find out much more information about any potential lender so you can know that you are making your best decision.
By: Terry Edwards