If you need to borrow money, borrowing from your home equity through a second mortgage is often one of the most cost-effective ways to do so. But if your credit is less than perfect, you may be wondering if this is even an option for you. The good news is that it is possible to get a second mortgage – even with bad credit. And in this article, we will explain how.

How To Get A Second Mortgage With Bad Credit

If you need to borrow money, borrowing from your home equity through a second mortgage is often one of the most cost-effective ways to do so. But if your credit is less than perfect, you may be wondering if this is even an option for you. The good news is that it is possible to get a second mortgage – even with bad credit. And in this article, we will explain how.

What is a second mortgage?

Before we go into the details of getting a second mortgage with bad credit, it is first important to understand exactly what a second mortgage is. A second mortgage is simply a loan that is secured by the equity that is in your home. The more equity you have in your home, the more you will be able to borrow with a second mortgage. Most lenders will allow you to borrow up to 80% of your home equity.

Just like with your first mortgage, you will make payments on your second mortgage either monthly or bi-weekly. On each payment, you will pay down part of the principal along with interest. And while second mortgages generally have higher interest rates than first mortgages, they are still usually much less expensive than other forms of credit.

When you reach the end of your second mortgage term, you will have the option to pay off the balance or to renew your second mortgage for another term (just like you do with your first mortgage).

How can you get a second mortgage with bad credit?

If you want to get a second mortgage with a traditional lender, you are going to need to have pretty good credit in order to do so. Fortunately, there are many lenders out there who specialize in helping people who have bad credit. These lenders are able to look at the bigger picture and not just your credit score.  Factors these lenders will consider is how much equity you have in your home, etc.

If you are considering getting a second mortgage with one of these specialty lenders, it is highly recommended that you work with a professional mortgage broker. Mortgage brokers have connections with dozens of lenders – including bad credit lenders. They know the industry and can help you find the right lender for you at the best possible interest rate.

Other advantages of working with a mortgage broker to get a second mortgage with bad credit include:

  • Your mortgage broker will steer you away from disreputable lenders.
  • Your mortgage broker will help you with all the paperwork and let you know what documents you need to provide to the lender.
  • Your mortgage broker will act as a coach and answer any questions that you may have.

Contact us today

You don’t need to have perfect credit to benefit from getting a second mortgage. If you are interested in exploring whether a second mortgage is right for you – or if you are ready to apply for one – we can help. Contact us today to speak with one of our brokers.