Understanding the difference between first and second mortgages and the guidelines for each type of loan.

2 min read

If you’re seeking funding for a real estate transaction, Private Lending Sydney can be a great alternative to conventional bank loans. First and second mortgages are the two primary types of loans offered in private lending, and it’s important to understand the differences between them and the lending standards for each.

A first mortgage is a loan where the lender has priority over all other creditors or lenders in the event of a default. As a result, first mortgages are considered less risky and come with lower interest rates. To qualify for a first mortgage from a private lender, borrowers typically need a credit score between 550 and 600, proof of income, and a down payment of 20-25% of the purchase price.

A second mortgage, on the other hand, is a loan that ranks below a first mortgage and is typically used when the borrower needs to access the equity in their property. Second mortgages are considered riskier and come with higher interest rates. To qualify for a second mortgage from a private lender, borrowers typically need a higher credit score between 600 and 650, proof of income, and a significant amount of equity in their home.

Understanding the difference between first and second mortgages and the guidelines for each type of loan.

At Archer Wealth, we offer both first and second mortgage loans with affordable interest rates and flexible repayment schedules. We pride ourselves on understanding our clients’ unique needs and providing fast and reliable lending solutions.

 

If you’re a mortgage broker, partnering with us can give you access to a dependable and trustworthy private lending partner that offers competitive rates and quick approvals. Contact Archer Wealth today to learn more about our private lending options and how we can help you achieve your real estate objectives.

Article Source- https://archer-wealth.com/2023/02/27/understanding-the-difference-between-first-and-second-mortgages-and-the-guidelines-for-each-type-of-loan/

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