For the approval of second mortgages, there are a number of aspects which are considered by a lender. Similar to a first mortgage loan, a lender who gives this type of loan can foreclose your home if you do not make the required monthly payments on time. So, making the necessary loan payments on time to the lender is as equally important as making the payments to the first one. There is a key difference between the first loan and the second one.
Since you have already taken a first loan with similar terms and conditions, a lender who gives you another loan usually charges a high interest rate. This is understandable. If your home is foreclosed for any particular reason, the money which is obtained from the sale of your home goes to the primary lender prior to going to the secondary lender.
So, there are chances that the money might not be sufficient to cover much of the later loan taken out on your property or home. Taking another loan on your property or home might be more difficult. The lender looks into various aspects before deciding to approve your loan. A high credit score gives better chances of the loan being approved.
Another aspect is the amount of equity which is available in the first loan. If the equity is high, then, the chances of the loan being approved are higher. There are better chances of approval for another loan on a home for those who have solid working history. The ratio of debt to income is another aspect which is checked. With a lower one, there are higher of the loan being approved.
In short, there are many aspects which are taken into account by lenders for the approval of second mortgages. Some of them are credit score, debt to income ratio, employment history and home equity.