What is a mortgage?

The

mortgage for pigs is a type of additional or second mortgage, which is performed simultaneously with the acquisition and start of the first mortgage. This type of mortgage arrangement can also occur when refinancing the existing mortgage, and at the same time a additional loan or mortgage for home capital or mortgage is obtained. One of the advantages of this type of strategy of a combined credit strategy is that the mortgage for pigs often reduces the ratio of the loan to the value of the primary mortgage to the point that private mortgage insurance is no longer necessary.

The usual approach to using a Piggyback mortgage is to create a system in which 80% of the purchase price is covered with a primary mortgage, a step that usually makes it easier to obtain better interest rates. The Piggyback mortgage itself usually covers an additional 10 percent, so the buyer leaves the remaining 10 percent as a deposit. Ideally, rates applied to a secondary mortgage are not more than slightly higher than travele rates apply to the primary mortgage, the situation thatRá usually creates a less financial obligation than the transfer of private mortgage insurance, which would be needed otherwise.

Using a mortgage for pigs is not always the best choice. It depends a lot on how the property gained with both mortgages appreciated. If the Buyer suspects that the property will significantly increase the value in a short period of time, this second mortgage may not be necessary, as the loan ratio to the value falls below this 80% of the brand earlier than later. This would mean that paying for private mortgage insurance during this interim period may actually be more cost -effective than to remove the current second mortgage, especially if this second mortgage has a higher interest rate than the primary mortgage.

In situations where no short -term expectations of increasing real estate are in value, using a mortgage on pigs, is probably not the best solution. The aim is usually madet of this secondary mortgage obsolete, because the values ​​of the property increase to the extent that the primary mortgage represents a lower percentage of current market value. At this point, refinancing the mortgage so that the retirement loan and the remaining first mortgage be reworked to allow more acceptable conditions to be possible. Without this expected increase in market value, there is a great chance that the use of a mortgage strategy of a piggyback would cost the buyer in the long run more than simply buying private mortgages.