Combining Mortgages from Two Properties into One

This would leave a large mortgage on one property and the other property mortgage-free.

As we always tell you, having debt is not a negative thing if your financial sacrifices in the years to come are due to a mortgage. Buying a house is an investment for your future and a great way to gain stability.

Being said that, if you have more than one property, you may want to simplify your monthly bills into one. In the US, that method is implied when combining two mortgages. In this article we will take you through this process, so keep reading!

A second mortgage is also known as a home equity loan in some specific cases. If you ask for one, you will see clear benefits to your financial situation immediately. Here you have a hint of what can happen:

• By combining two, you can reduce your interest rate, the lower it is, the less you will pay in total over the whole term of the loan.

• You might pay off your debt faster if you consider asking for a shorter loan term. This practice is especially useful if the total amount of interest you will pay is lower; in this case, the properties are yours sooner!

• A clear beneficial example is that by consolidating your mortgages into a single fixed-rate mortgage, you eliminate the risk of a variable-rate mortgage knowing that interest rates can increase and you probably will not be ready to pay more.

What you should consider

The consolidation of your mortgages must be good for your pocket in the long run. Experts suggest that to make a decision, think about the advantages and the downsides of the property. You can buy it and use it as a permanent residence, and a property that will be an investment. Of course, talk with your accountant about how you will pay taxes for combining the mortgages. This is what you should do:

When defining your permanent residence

When defining in which property you are going to live, analyze both of your properties and find out which one has the most equity to cover the other mortgage. Consider combining the loans on your primary home, if one of the properties is your primary residence. Make sure your loan-to-value does not exceed 80% because you will also need to pay mortgage insurance.

Look for quotes

After you have made a decision, look for mortgage companies, because they are great places to get quotes. Make comparisons and choose the lender that might be able to offer better terms than others. In both or more scenarios, compare all aspects of the loans, beyond just interest rate. Remember to ask about fees for using the equity in your home.

Clarify it is a mortgage combination

Please note that you have to ensure the lender you know you are paying off the loans from two properties, primarily because the attorney will obtain the official payoff statement from the lenders about the balance of the mortgage. Regarding this matter, our best advice is for you to pay off the second mortgage once you receive the cash from your first home's equity. And do not forget about the lien! So file as soon as possible because it could take a few weeks.

And because we know every case is different you can contact Intercorp Mortgage Solutions for more information regarding this subject! It is more than okay to want information to see the bigger picture, to pan out better and see positive results with your decisions. Let us hear about your doubts, and we can show you the options that best suits you!

Source: Intercorp Mortgage Solutions

 A lower rate could mean saving thousands on your loan.