Puisne mortgage (A 7 point review)

In this brief guide, we will discuss what a pusine mortgage is, how to get a puisne mortgage and the potential risks involved.

What is a Puisne mortgage?

A pusine mortgage is a mortgage where the mortgage deeds are not secured on the title.

A pusine mortgage is essentially a second mortgage secured on a property where there is already a mortgage. Usually, in cases like this, the first mortgage will be secured on the title deeds of the property and the mortgage lender will insist that any other mortgages secured on the property are not secured on the title deeds. 

Puisne mortgages can be seen as unsecure secondary mortgages. They will usually have very high interest rates.

Why get a puisne mortgage?

A puisne mortgage could essentially be seen as a way to borrow further using the equity you have in your property as collateral. An example of a Pusine mortgage could be a home improvement loan or a debt consolidation loan. These are very common use cases for puisne mortgages.

With a puisne mortgage the first mortgage lender who secured the title deeds will have priority over all other mortgage lenders should they need to repossess your property in order to recover their mortgage funds. 

The second mortgage lender will then be given the balance of whatever is left after the first mortgage lender has cleared their outstanding mortgage balance with the proceeds of the home sale which is done after a home repossession.

How to get a Puisne mortgage?

A puisne mortgage is simply a mortgage which is secondary to the initial mortgage. The mortgage affordability requirements for a business mortgage will be the same as any other mortgage. 

You will need to show that you have enough equity in your home, a suitable credit score and enough disposable income to be able to make the monthly mortgage repayments on your puisne mortgage as well as your original mortgage. 

You will also need to have a regular job with a regular income.

The documents a mortgage lender may request for a puisne mortgage include:

Your bank statements for the past 3 months

Your payslip for the past 3 months

Your identification documents such as your passport or driving license

Your sa302 form if you are self-employed

Your accountants certificate for mortgage if you are self-employed

Your tax return forms

Risks of a puisne mortgage

Getting a second mortgage could increase the risk of you defaulting on your mortgage. 

You should only get a second mortgage if you are sure you can afford to make monthly mortgage repayments on both. If you fail to make your monthly mortgage repayments then your home could end up getting repossessed

Get a mortgage

You may want to consider using an independent mortgage broker to get a mortgage.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.

This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application.

Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.

Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.

In this brief guide, we defined a puisne mortgage and when it is used. If you have any comments or questions please let us know.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.