If you are someone in need of extra money, sometimes a second mortgage is key. A second mortgage is a second loan secured against your property. Getting another mortgage can help you finance home improvements, purchase additional homes and create a home equity line of credit.

It can also lower your overall monthly payment saving the important cash flow which allows you to focus on debt principle repayment and even help you get out of debt without resorting to further borrowing on credit cards. With the funds being readily available it can be a much easier way to get money fast.

Another benefit is that the payments paid on a second mortgage is usually interest only, which can help save money by applying more money to the higher interest debt. This is a perk that is often not accessible with other loan types.

Although there are some advantages to getting a second mortgage, there are also some disadvantages. When getting a second mortgage, you are potentially risking your home by doing so, which is why it is imperative to make sure that your budget has adequate room to pay the mortgage off on time. That way you don't default on your loan and risk the lender taking your home for collateral.

A second mortgage can have a term of up to 25 years, depending upon the loan structure. Some are required to be repaid in as little as one year.

In considering an application for a second mortgage, lenders typically look for high credit score, solid employment history, significant equity in the primary mortgage and low debt-to-income ratio. A second mortgage generally has a slightly higher rate than a primary mortgage. The reason for this is because the second mortgage will not be paid off until the primary one is paid. The lender must take on more risk than for a first mortgage, so generally the rate is also higher. However, the rate is still lower than those of credit cards.

When attaining more than one mortgage there can also be some large fees, depending on the amount of the loan and how long it will take you to pay it off. The worse your credit is, the higher your rate will be. Although most lenders will offer up to 95% of the equity, you should never borrow more than 80% of the combined value of all the loans. When considering any additional mortgage, speaking with a mortgage broker will help in weighing all of the options to make an informed decision.