As opposed to doing a complete rewrite of his mortgage, John would have the option of taking a second mortgage. A second mortgage would allow John to take a second loan against the value of his home that remains after accounting for the balance owed on the first mortgage. Second mortgages allow consumers to borrow up to 100% of the value of the home and sometimes more (see over-equity loans below.) Using the example above, if John had more credit card debt (let's say $35,000 worth with a monthly payment of $775) the value of his home would not be enough to cover his bills at 80% loan to value on a first mortgage rewrite. However, on a second mortgage, John could borrow up to 100% loan to value and he could take a second loan out for the available equity ($45,000) to pay off his credit cards and car. Assuming, John got a 30-year second mortgage at 11% and, with it; he paid off his credit cards ($35,000) and his car loan ($10,000):

John would reduce the interest that he was paying on his credit cards by 8%(19%-11%). He would have 1% higher interest on his car but it would ease the payment burden, which will allow John to stay in control of his finances.

Before the second mortgage, John's monthly expenditures would be as follows: