A second mortgage on the same property adds to the previous loan to value ratio. Suppose, you have an existing mortgage loan of Rs.35 lakh on an Rs.80 lakh property. You decide to mortgage the property a second time to borrow a sum of Rs.20 lakh. The LTV ratio was 43.75% in the first case. An additional loan of Rs.20 lakh increases the loan to value ratio to 62.5%. You can use a mortgage loan to value calculator to determine the cumulative LTV you are eligible for.
Taking out a second mortgage on a property is more cumbersome than the first. You can consider a top-up loan from your current lender if you did not obtain the entire amount for which you were eligible in the first case. You can also obtain a new loan on your immovable property. However, the eligibility criteria for a fresh, second mortgage loan are more rigid.
Generally, these criteria include an applicant’s age, credit score, occupation type and status, and the mortgaged property’s current value and age. Current debt-to-income ratio is a crucial criterion in this regard. Ideally, existing obligations should not account for more than 50% of an applicant’s disposable income to be deemed eligible for a second mortgage loan. Nonetheless, it’s wise to use a mortgage LTV calculator to make an informed choice before taking out a second mortgage.