Many homeowners have heard of second mortgages, but few truly understand how they work, when they make sense, or what costs are involved. A second mortgage can be a powerful tool — but only when you fully understand the structure, risks, and benefits.

See how a second mortgage can help you access equity and manage debt more strategically. 👇

Second mortgages are based on the equity you’ve built, not your original purchase price, and they operate very differently from your first mortgage.

1️⃣ Second Mortgages Are Based on Your Available Equity

The amount you can borrow depends on your current home value and remaining mortgage.

✔️ lenders allow access to up to 95% of equity

✔️ equity = home value minus existing mortgage

✔️ higher equity = larger borrowing potential

This makes second mortgages useful for consolidating debt, renovations, or major expenses.

2️⃣ Interest Rates Are Higher Than First Mortgages

Second-position lenders take on more risk.

✔️ higher risk = higher interest rates

✔️ rates often range from 6.95%–19.95%

✔️ private lenders may offer flexible solutions

Because the lender is second in line during a default, they price the loan accordingly.

3️⃣ Payments Can Be Interest-Only

A major advantage of second mortgages is flexible payment structure.

✔️ interest-only payments available

✔️ lower monthly cost

✔️ option to pay principal + interest when preferred

This flexibility helps homeowners manage cash flow during financial transitions.

4️⃣ Expect Additional Fees When Setting Up a Second Mortgage

Second mortgages involve several upfront costs.

✔️ appraisal fee (approx. $300)

✔️ legal fees (approx. $2,000)

✔️ lender and broker fees (1%–5%)

Understanding fees upfront helps you compare a second mortgage against alternatives like refinancing or a HELOC.

💬 Final Thought

A second mortgage can be an excellent tool for accessing equity, managing debt, or improving cash flow — but it’s important to understand the costs, risks, and payment options before moving forward. When structured properly, it can be more effective than refinancing or using a HELOC.

If you’d like us to review your equity, compare options, and determine whether a second mortgage is right for you, send The Frontline Mortgage Group a message anytime.