Second Mortgage Repayment Schedules

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Second Mortgage Repayment Schedules
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By Kristy Annely

Second mortgages are secured loans that you take out using the equity on your property. They are more commonly known as equity loans. They are based on the market value of your home minus the balance of your first mortgage. For example, if the properties you own have a market value of $200,000 but you still have a

$100,000 balance on your first mortgage, you would then have a $100,000 equity line of credit. You can borrow up to that much money using your equity to secure the loan.

Types of second mortgages

There are two types of second mortgage loans that you can apply for, the closed-end loan and the open-end loan. The closed-end loan allows you to borrow one lump sum of cash at the time of closing. However, this type of loan disallows you to borrow further after the initial loan. You will be able to borrow up to 100% of the value of your home, minus any liens.

The second type of mortgage is the open-end loan. This is a much more flexible type of loan. It allows you to choose when and how often you can borrow against the equity of your property. Like the closed-end loan, you will also be able to borrow up to 100% of the market value of your property, minus any liens attached to the property.

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Repayment Schedules

Closed-end loans can have a repayment schedule that is amortized up to 15 years with a three- or five-year balloon payment. When the balloon balance is due, you can choose to pay off the balance or refinance the remaining money you owe.

Open-end loans have credit lines for up to 30 years with a variable interest rate. The minimum monthly payment that is due in this type of loan can go as low as the interest rate that is due.

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