Second Mortgage Loans

A second mortgage is a loan that is subordinate to another loan taken against the same property. They are called subordinate in the sense that if the loan is defaulted, the first loan gets paid off first before the second one. In such cases of default, any remaining money will be used to pay off the second mortgage after clearing the first.

The second mortgages are therefore riskier for the lender. Thus, second mortgage loans have a higher interest rate. They also carry closing costs and points that make them more expensive.

There are different types of second mortgages. In the most common type, the borrower takes loan for only the actual equity. For example, if a property is valued for $75,000 and if the owner has availed a first mortgage for $50,000, it is easy to secure a second mortgage for $25,000.

A line-of-credit second mortgage is another type in which the borrower applies for a loan but does not avail himself of it immediately. He can draw the money whenever he needs it.

Sometimes a second mortgage is taken at the same time the borrower secures the first mortgage. For example if the borrower wants to obtain a loan that demands a forty percent down payment and he has only thirty percent, he can apply for a mortgage for the required ten percent.

A second mortgage loan can also be applied for a value that is more than that of the borrower's property. But these types of loans are riskier for the financiers and demand greater credit. Moreover, the interest may not be fully tax deductible.

A second-mortgage loan is a good option if you need money urgently. Refinancing the first loan could also be a better option, but it depends on your case. But beware of the transaction costs when you decide between a second mortgage and a refinancing option.

Second Mortgage Loans provides detailed information on Second Mortgage Loans, Second Mortgage Loans After Bankruptcy, Second Home Equity Mortgage Loans, Second Mortgage Loan Rates and more. Second Mortgage Loans is affiliated with Florida Mortgage Loan Calculators [http://www.e-floridamortgageloans.com].

Get Mortgage Life Cover

If you have a mortgage, then mortgage life cover will make sure the loan is paid off in the event of your death, or, if you take out some add-on benefits, should you suffer from a critical illness or cannot work due to illness or disability.

Mortgage insurance is often called 'decreasing term cover' because the policy lasts the life of your mortgage and pays out a smaller amount each year as your mortgage decreases.

Although the amount of cover the policy pays out decreases in line with what you owe your mortgage lender, the premium you pay the insurance company each month stays the same.

These mortgage policies are cheaper than term life insurance and are guaranteed to pay off you mortgage if you die unexpectedly - providing you haven't increased your mortgage without increasing the sum assured under the policy, of course.

If you do borrow more, you should review your policy and consider taking out a top-up.

Remember, if you outlive the mortgage policy, you and your family get nothing. The policy only pays out when you die during the policy term unless you have included optional extras at additional cost.

These extras include:

· Waiver of premium

The insurance company pays your premiums for a set period if you cannot work due to sickness or disability

· Guaranteed or reviewable premiums

If your premiums are guaranteed they remain the same for the life of the policy. Reviewable premiums are adjusted periodically, meaning you can end up paying significantly more than you started with for the same cover.

· Critical illness

This add-on pays out a lump sum if you are diagnosed with an illness listed in the policy documents regardless of whether you return to work at a later date.

Most insurers won't pay out on your death if they have already paid out for a critical illness.

· Terminal illness

If the policyholder is diagnosed with a terminal illness, the policy pays out early.

Mortgage life cover is available on a single life or jointly with a partner or spouse if you hold a mortgage in joint names.

For a single life, the policy pays out on the death of the policyholder - or if one of the add-on events is triggered.

For joint lives, you have a choice on how the policy pays out.

Either the policy pays out on 'joint life, first death', that leaves the surviving policyholder with the cash.

Alternatively, the policy can be 'joint death, second life', sometimes called 'joint life, last survivor', which pays out on the death of the surviving policyholder. This would pay off the mortgage and leave children with an asset they could continue to live in or sell.

If you have mortgage life cover, always consider putting the policy in trust. This is simple to do and costs nothing. Generally, the insurance company provides a deed of trust.

Putting the policy in trust effectively puts the policy outside of your estate, so the money goes straight to your family rather than sitting in probate while your executor sorts out your will.

David Thomson is Chief Executive of BestDealInsurance an independent specialist broker dedicated to providing their clients with the best deal on their life insurance, critical illness cover and home and motor insurance.

Understanding Second Mortgage Loans

How many of you feel the need for a second loan when you are still busy paying off the monthly installments of the first loan? Well, ask the young generation; most of them would need a second loan to support their lifestyle. Surely, there is no harm in taking a second loan if you are confident of paying it off. Most of the times, people go ahead for loans as it eliminates the need to save money for quite some time to buy a car or go for a holiday. A loan allows them to enjoy the benefits of the product or service while paying monthly installments for it. However, let us first understand what second mortgage loans are.

Second mortgage loan, as the name implies, is a second loan that you can secure over and above the existing first loan. This second mortgage loan allows you to borrow money on the basis of your home equity. Home equity is simply the difference between the present appraised value of your home and the amount of money being paid for your first loan. Based on this calculation, banks or other financial institutions can offer you a second mortgage loan, which is anywhere between 85-125 percent of the appraised value of your current home. However, be prepared to pay more in term of interest rates for the second mortgage as the first loan holds priority over your home in case you turn into a defaulter.

There could be a number of reasons, which compel you to go ahead for a second mortgage loan. There might be an instance where you find yourself in a lot of debt due to intensive shopping through your credit cards. You could also need an auto loan to purchase a new sports car to please your fiance! On the other hand, the hospitalization of a family member and the huge medical bills could be a strong reason for you to secure a second loan. Whatever may be the reason, make sure you do your homework well before going ahead for a second mortgage loan.

Mortgage Life Cover For Peace of Mind For Your Loved Ones

Taking out a mortgage is a huge responsibility as, if you do not continue to meet your mortgage repayments, you are at risk of losing your home. With this in mind you might want to give some thought as to how your loved ones might manage if you as the main wage earner were to die before the mortgage balance was paid off. If you want peace of mind of protection for your mortgage in the event of your death then you may wish to consider mortgage life cover.

What is mortgage life insurance?

Mortgage life cover is also known as decreasing term insurance and is one of the several types of life insurance available. This specific type of protection is typically taken out by the main wage earner, the one responsible for repaying the mortgage each month. If both partners pay an equal share in the mortgage repayments then you may wish to take out mortgage life insurance for both names on the same policy, a joint policy. If taking a joint policy the insurance company typically pays out upon the death of the first policyholder. Alternatively, you may wish to take out separate policies.

How does mortgage life protection work?

When taking out mortgage insurance life cover you take out the policy for the amount that is left outstanding on your mortgage at the time of applying for the life cover. For instance, if you have £10,000 left to pay on your mortgage this could be the sum insured.

The term you take your mortgage life cover over is the term that is left on your mortgage at the time of applying for life insurance. For example, if you have 5 years left to pay on your mortgage this is the term that you take out mortgage life insurance over.

With the above example, you are covered for £10,000 and for a term of 5 years. If the person named on the insurance were to pass away during the 5 year period, the mortgage balance would be cleared by the proceeds from the life insurance.

As you continue to pay your mortgage each month the amount left owning on it decreases of course, and so does the amount your decreasing term insurance pays out. If you outlive your insurance policy this means you have paid off your mortgage and there is no balance, so there is no payout and the policy simply expires.

Mortgage life cover may make a huge difference for your loved ones in the event of your death. Without a policy, they may struggle to find the money for the mortgage repayments and this may, in the worst case, lead to repossession and eviction. You may also wish to give some thought to how you and your family might manage if you suffer a critical illness. With advancements in medicine, many people suffering from a critical illness now live longer with their incapacity. However if you are disabled and unable to work you may struggle to find the money for your mortgage repayments. With this in mind you may want to consider having critical illness insurance alongside your decreasing term insurance.

David Thomson is Chief Executive of BestDealInsurance a completely independent specialist broker dedicated to providing their clients with the best insurance deal. They offer great value life insurance as well as, critical illness and income protection, ensuring that their clients have the protection they need, without leaving a hole in their pocket.

Choosing Life Cover to Protect Your Mortgage

Buying a family home is a time when many people begin thinking about taking out a life insurance policy to go along with it. A mortgage is very often the most significant financial decision that any individual makes, and it is always prudent to find a way of protecting your mortgage, to ensure that your loved ones will not suffer financially from the loss of your income if you should die. A carefully-chosen life insurance policy is an ideal method of achieving this protection.

Level Term and Decreasing Term Life Cover

The most common way of protecting your mortgage is to purchase term life assurance. Selecting life cover for mortgage protection requires making a choice between two different types of insurance-level term and decreasing term insurance.

If you purchase level term life cover, the amount you are insured for remains constant over the life of the policy. With a decreasing term policy, on the other hand, the size of the potential pay-out decreases as the mortgage is paid off. Regardless of which type you choose, the policy ends automatically if a claim is made, or when the mortgage is paid in full.

The Cost of Mortgage Life Insurance

The cost of mortgage life cover depends on several factors. The most important determinant of the cost of the policy is the terms and conditions of your mortgage-the amount you borrow, and the amount of time you'll require to pay the mortgage in full. As will all types of life cover, the cost also depends on your lifestyle, age, and physical health. Lastly, the type of policy you choose-level term or decreasing term insurance-also affects the cost.

In most cases, level term mortgage cover is more expensive than the decreasing term variety. This is because with decreasing term insurance, the size of the pay-out decreases over time, so the overall cost of premiums is reduced to reflect that. Because all other aspects of these two types of policies are more or less equal-in both cases, the mortgage is fully paid in the event of a claim being made-the type of insurance you get will typically depend on how much you can afford.

Level term cover does offer one advantage that decreasing term insurance does not. Because the size of the pay-out is constant over the life of the policy, your dependents will benefit from increased financial security if there is money left over after the mortgage has been paid. For this reason, level term insurance should be your goal if it's affordable. This type of insurance provides another advantage if you have an interest-only mortgage, as your repayments increase over time, and equity is slow to build-a level term mortgage can provide increased financial security in this case.

Other Considerations

Two other important decisions to make are whether to choose joint insurance or two separate policies for you and your partner, and whether or not to purchase additional critical or terminal illness cover. Some policies may include this coverage automatically, and some don't, so it's always important to read the fine print and make sure you understand what you're covered for. By the same token, a joint policy isn't always the best solution, even for a married couple, so it's equally important to check investigate all your available options thoroughly before deciding between joint and separate policies.

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