What many borrowers do not know, however, is that it is possible to take out additional mortgages on the same property. While this may be risky, especially if the borrower is unable to pay off both mortgages, a second mortgage is a great way to make large investments, such as a university education or starting up a small business.
Second mortgages can be procured from most major lenders, however the increased risk requires that the borrower has an excellent credit history and a strong background check is always required. After all, the lender wants to make sure that they will be paid back in full. The value of the house, which will serve as collateral, must also be appraised, and this will inherently limit the value of the loan, since if the loan is not paid off the borrower will need to foreclose on the house and take possession of it.
Due to the collapse of the mortgage market in 2008, most banks are hesitant to give borrowers a second mortgage. However, if they have reliable income and their house is good collateral, they will lend the money to those with good credit histories. It is still very important to pay this mortgage off as quickly as possible, however, as unpaid mortgages become very expensive over time.