Are Third Mortgages Worth It?
A third mortgage is a loan taken out on a property that already has two mortgages on it. When you take out a third mortgage on your home you still have to pay off your first and second mortgages. However, this isn’t as scary as it sounds. If you need to access the equity in your home, third mortgages can be quite advantageous.
How to get a third mortgage
Third mortgages can be tricky to obtain, as most lenders see them as risky. Because you have already taken out two separate loans on your property, some lenders assume that you will have a harder time paying it back. This is a bad assumption on their part; not everyone will default on their loan.
Third mortgages are based on the value of your property. If you’ve been able to maintain your home, there’s no reason that its value hasn’t gone up since you bought it. For third mortgages, lenders use your home as collateral and the more valuable it is, the more you can borrow.
The best way to get a third mortgage is to contact your current lender and ask if you qualify. If your lender says you do then you’re all set; however, be prepared to shop around. Not all lenders provide this type of mortgage. We do because we understand that sometimes you need to access your home’s equity even though you already have two existing mortgage loans against the property.
What are the benefits of this kind of loan?
Third mortgages provide the homeowner with numerous benefits. You can use the funds available from your third mortgage to pay for upgrades to your home increasing its value even more. Renovations and retrofits are a great way to add to your property’s monetary worth and third mortgages allow you to do that. Third mortgages also give you the power to consolidate debt such as credit cards, car loans and lines of credit. When you consolidate your debt you make one easy monthly payment that encompasses everything instead of paying each off separately.
When it comes to third mortgages it is important to keep in mind that you still have to pay down your first and second mortgage. Nevertheless, that shouldn’t stop you from considering another home loan to tap into the equity your property has to offer.
So, are third mortgages worth it? For most homeowners, the answer is yes. Contact PrivateLend.com for anything mortgage related. We provide our clients with everything from third mortgages to no credit mortgages.