Pros and Cons of a Piggyback Mortgage Loan

A piggyback mortgage loan is a second loan that is typically taken out on the property at the same time as the primary loan is. This type of loan arrangement carries with it some advantages and disadvantages. Here are some of the pros and cons of a piggyback mortgage loan.


One of the biggest advantages of getting this type of loan is that you are going to be able to avoid private mortgage insurance. The primary reasoning behind this type of loan is that you can get a primary mortgage that is under 80 percent of the value of the house. When you borrow only 80 percent with the first loan, you are not going to have to worry about paying private mortgage insurance. This can save you money on your monthly mortgage payment.


The big disadvantage of this type of loan is that you are going to have two loans to deal with. You are going to have to make two loan payments every month. 

Another disadvantage to this type of loan is that it is going to have a higher interest rate than your primary mortgage. This somewhat negates the savings on the PMI.

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