Second mortgages during rate rises

Second mortgages during rate rises

3 June 2008

Second mortgages may offer a good source of extra funds to invest with, but they are only advantageous if the money you make using second mortgages will outstrip the costs of the mortgage. You can calculate the costs of a mortgage at current interest rates, however, interest rates are expected to rise, and no one yet knows when they are likely to stop rising.

Fixed rate second mortgages can help to keep interest payments predictable for a short period of time, but fixed rates have by now been adjusted to take near future rate rises into account. You will also probably be unable to pay off fixed rate second mortgages faster than the minimum repayment rate, even if you are making more money than expected. This means that it could be quite difficult at this time to make a profit on investments made using second mortgages. Ensuring that you can repay your original mortgage is probably a better option right now, and you may find that refinancing could be advantageous for your financial situation.

Please visit our comparison page of mortgage lenders to look for an institution that may be able to refinance your mortgage or provide you with second mortgages.

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