How does it take to avail of 2nd mortgage loan?

There are different types of loans that an individual can apply for. So You must be wondering and must be willing to know about 2nd mortgage loan. Generally, when you take a loan, you have to pay back the amount with interest along with you have given the lender some guarantee like papers, bonds, Non-movable assets like house, property as collateral. This acts as security against which the loan provider will provide you with the loan amount. Now let us understand what a second mortgage loan is? This means a person wanted to take another mortgage loan during the continuation of the first mortgage loan.

Things to remember while applying for 2nd mortgage loan

If you are applying for a 2^nd mortgage loan, the lending will charge higher interest than the first one because the first loan repayment is still pending.

Secondly, in mortgage loans, one should pay the interest monthly while applying for a second mortgage loan with a strong financial statement. While applying for a loan, your credit score must be more than 600, and your debt ratio must be less than 45 percent.

The third thing that you must keep in mind is that you should apply for a loan in government sector banks or private banks. Avoid taking loans from N.B.F.C (Non-banking and financial institutions) as they charge higher processing with almost twice the interest charged by banks.

Time required for approval of the loan?

Well, the time requires for approval varies from company to company and bank to bank. But if you are availing for a 2nd mortgage loan, it may take on an average of 5 weeks to 6 weeks. But if your cibil score is good and you are an honest customer of the bank, you might get a loan even quicker than the average time.

Positive side and negative side of the Second mortgage loan

Positive side

1. It will help you to expand your financial property and may fulfil your dreams
2. You will get a lesser interest rate if you apply in banks instead of private NBFC.
3. This loan amount can be used for your financial stability and paying school and university fees.

Negative side

1. As the name suggests, your collateral will be at high risk if you are not able to pay the monthly interest.
2. Your loan approval depends upon your past performances and financial stability.
3. Your debt to equity ratio will increase, which can lead to higher monthly interest.

Conclusion of the topic

 

If you are applying for a Second mortgage, you are taking a huge risk, but yes, there is a chance of generating more income. If you are financially stable and can afford monthly interest payments, then there is no issue, but if you cannot afford it is better to avoid the second mortgage; instead of that, try to pay the first mortgage loan afterward, you can apply. And it is highly recommended to ask your financial advisor in banks or any online broking firm.