Is a Second Mortgage Right for You?

Have you ever wondered what a second mortgage is exactly, and the difference between these and other kinds of loans? Well, you’re not alone!  Second mortgages are becoming increasingly popular in Canada and before you go out and get your own, there’s a few things you should know first.

What is a Second Mortgage?

When you own a home you can have many different loans against it. You don’t have to just have the first mortgage, though it’s good to make sure that you don’t take out the entire value of your home in loans for the most practical of reasons. Getting a second mortgage is just like getting your first mortgage, but you can get it as easy as walking into a bank or going to a Toronto mortgage broker. You want to work with a mortgage broker so you don’t end up with a bad mortgage.

Second mortgages can last anywhere from one year to thirty years, but repayment is another issue. You may not have to repay them until you finish paying off your primary (first) mortgage, but you could have to start paying it off in the first year. This is why it’s important to pay attention to the terms offered to you in the GFE or good faith estimate. Your broker will help you analyze from the stack of offers which one will fit you best.

Is a Second Mortgage Right for You?

Figuring out if it’s the right one for you means going over what they have to offer you. It’s important to make lenders compete before you try and settle on a single lender. When you go into your lender’s office there is zero incentive for them to give you a great deal on your mortgage. What is there though is the fact that they can make sure you don’t leave that office until you sign off. With a mortgage broker you won’t have to deal with such high pressure insanity. They’ll help you not only fill out the paperwork, but also to get paired with the right lender to get a loan that will fit your situation and lifestyle.

What Affects a Second Mortgage?

Understanding what affects your second mortgage chances will help you take the appropriate actions to make things work out in your favour:

How Much Debt Do You Have? Your debt to income ratio is an important indicator to lenders; if you have too much debt and too little credit you’ll either be denied or given an outrageous rate.

Are You Employed? Your employment history has a lot of bearing on your chances.

Have You Paid Off Your First Mortgage? If you owe more than 30% on your first mortgage, you may have problems.

Homebase Mortgages is a leading Toronto mortgage broker, which specializes in all types of mortgages ranging from home equity loans, second mortgages, private mortgages, mortgage refinancing, home mortgages and hard money lending.

Contact Information

Mike Smith

Marketing Coordinator

HBM

Contact via E-mail