Refinancing is to take out a new mortgage with the original mortgage lenders (i.e. banks or financial lending firms). Therefore, there is only one mortgage lender involved in the transaction. When the property value has appreciated, making remortgage based on the appreciated property is a cheap form of acquiring more cash with lost cost.
Second Mortgage is different from refinancing, as it is borrowed from another mortgage lender on top of the original mortgage?s remaining balance. If the mortgage borrower cannot pay off the mortgage and the property is auctioned, the first mortgage lender will be paid first. The second mortgage lender will only be paid if there is any money left. Because of this, the second mortgage generally has a higher interest rate.
All banks provide remortgage, but not all banks provide second mortgage.
