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When to Get a Second Mortgage
A second mortgage is a secured loan that acts as subordinate to a different loan against the same property (a traditional mortgage). The reason that second mortgages are considered subordinate is that if the borrower is unable to make repayments and so goes into default, the first loan/mortgage is the one that gets paid off first. This means that second mortgages are much more risky for the lender than first mortgages.
For this reason banks are usually unwilling to provide second mortgages to borrowers, which is where private lenders come into play. Here at Easy Settle Finance we understand that you may need to take out a second mortgage for various reasons, and we offer funding terms of up to 70-75% of the Loan to Value Ratio (LVR) of your property.
Private Lending Regulations
There is a common misconception among the general public that private finance lenders are not as trustworthy or as well-regulated as traditional financial institutions, when in fact they are subjected to similar Australian standards as banks. In fact, private lending is commonly referred to as “the oldest type of mortgage lending” because of its prevalence in the financial scene.
The different government bodies that are involved in regulating the Australian financial scene are ASIC and APRA.
APRA
The Australian Prudential Regulation Authority (APRA) is responsible for overseeing banks, general insurance and re-insurance companies, building societies, credit unions and most superannuation funds. APRA is also the Australian financial sectors national statistical agency.
Bank vs Non-Bank Lenders
For those who are looking for financing, whether it be for a second mortgage or for a business loan, it’s important to know that the banks are not the only option. Non-bank lenders are a great alternative to traditional financial institutions, and are governed by the same strict regulations that banks are legally bound to follow.
The definition of a non-bank lender is a financial institution that is privately owned and does not hold an Australian banking licence. Some of the advantages of choosing a non-bank lender over a traditional bank include:
What is Short Term Financing?
Short term financing, also known as bridging financing, primarily refers to loans that are given to borrowers for a period of up to 12 months. These loans are commonly sought after by businesses that require a quick injection of cash flow.
Some reasons why a company would get short term financing include:
- Long-term projects – If a business has taken on a long-term project that requires an initial cash outlay of more than they currently have available in cash flow, short term financing is ideal. The company will then be able to pay off the loan once the project is completed and the client has paid them.
The Right and Wrong Times to Use Bridging Finance
Many investors and home-buyers are aware of the benefits of bridging finance. However, a bridging loan should be used only in the right situations.
Here are some of the right and wrong situations from Property Reporter in which you should be using bridging finance.
Obtaining a Mortgage with Bad Credit
Borrowers who have missed loan repayments and defaulted on credit cards often find it a challenge to secure a home loan. While obtaining a mortgage can be hard with bad credit, it is not impossible.
These are some strategies from Message in the Waves that could help a borrower with bad credit secure a suitable home loan.
Refinancing a Mortgage with Bad Credit
Credit histories, home equity and debt-to-income ratios are some of the key criteria for refinancing a mortgage. Those with bad credit or a poor credit history should start by finding out their credit score.
Depending on the lender, borrowers with bad credit could still secure a suitable refinancing deal for their home, reported MSN Real Estate.
Find the Perfect Mortgage Broker
Mortgages or home loans are complicated products, especially for a first-time buyer. An experienced mortgage broker can be an excellent advisor in this respect.
It has been said that finding the right broker means that half the buyer’s work is done. Here are some useful insights for finding the perfect mortgage broker from the Home Loan Experts.
Different Types of Low-Documentation Home Loans
Traditional home loans come with strict requirements in relation to supporting evidence, but low-document home loans are different. Low-doc home loans, as they are known, are non-traditional mortgages that can be accessed by the self-employed, contract workers and others who are not full-time employees.
Advantages
Low-doc loans rely on self-verification and declarations by the borrower. As such, they are suitable for people without sufficient paperwork to apply for a traditional home loan. However, low-doc home loans can attract higher interest rates and fees, according to Small Is Beautiful.
How to Get a Bad Credit Home Loan
Bad credit home loans are an option for those with bad credit histories, as these borrowers usually have trouble securing a standard home loan.
Here are some of the issues to review when considering a bad credit home loan.