Equity for your second mortgage

Generally, the way the bank determines the lendable equity for your second or 2nd mortgage is through the value derived from the loan calculation. To help you understand this concept, let us assume that your home is worth $100,000. And, banks do not like to lend more than 90% of the property value. So for example, your first mortgage is worth $80,000 that is 80% of the value of the property. They may allow you to go up to 90% which would leave you with $10,000 available for either a home equity line of credit or a second mortgage.

So depending on how much your first mortgage balance is, just take 90% of the value of your home and subtract that to your mortgage. The remaining amount or the balance of equity is the amount the bank will allow you to tap into your second mortgage or home equity line of credit.