Another term used to describe piggyback second mortgage is 80/10/10 and 80/15/5 mortgage. Out of these, the most famous is 80/10/10. The numbers symbolize the percentage rate of first mortgage, second mortgage and down payment. For instance, if the first mortgage is of 80% then second mortgage is 10% and the down payment is 10%.
Such Mortgage Loan is for those house buyers who are incapable to afford a down payment of 20%.
Advantages of 80/10/10 and 80/15/5
The demand for such loan has increased recently. The reason is that such monthly mortgages are less of a burden than a PMI Mortgage. The rate of interest on the primary and secondary mortgage is tax deductible.
You get 95% finance on the buying price: you are just left with 5% of down payment with 80% of first and 15% of second loan.
You can easily avoid a jumbo loan. A combo loan allows you to finance till 95% of the buying price of the item.
It is a great tool and home loan planning for people. It provides benefit to home buyers, but the second mortgage needs some change on the digits as the house buyers pay lower mortgage payment and income tax. The best way is to have your mortgage lender make a Complete Cost Analysis which compares every home loan option and see its impact on your pocket and monthly payment.
80/10/10 and an 80/15/5 allows you to save interest and proves to be an easy and quick way to pay your complete loan.