Second Mortgages
What is a second mortgage?
In simple terms, a second mortgage is when you take out a second loan on an already mortgaged property. Generally, a second mortgage will be in the form of a home equity line of credit (HELOC), or another mortgage (a home equity loan). Borrowing amounts are usually lower than your first mortgage, and interest rates are often higher. People often take out a second mortgage to consolidate debt, pay for major purchases like home renovations, or for investment purposes (such as a down payment on a second property).
You may also think of a second mortgage as an additional mortgage on a different property, like a rental home or cottage. In this case, you can apply for a new mortgage for your second property.
When getting a second mortgage, it’s important to consider your unique financial needs and goals.
Why would I need a second mortgage?
The three most popular reasons to take out a second mortgage include:
1. Debt Consolidation. A second mortgage can be used to pay off other debts, by consolidating those debts into a single payment. It’s particularly useful for paying off higher-interest debts like credit cards, personal loans or student loans, since by amalgamating your debts you may be able to pay them off at a lower interest rate.
2. Home Improvements and other major purchases. Second mortgages are a good way to borrow money for home renovations, which could ultimately increase the value of your home. Second mortgages are also sometimes used to fund other major purchases using the equity in your home, such as college tuition, business expenses, and milestone life events such as weddings.
3. Buying a second home or investment property. Many people use a second mortgage as way to obtain the down payment for a second property or investment (rental) property. If you are thinking of buying a second property, a down payment of at least 20% is required for a mortgage, unless you or your family members will be living in the new property and not paying rent. Some parents also use the equity in their homes to obtain a down payment which is gifted to their children as a way to support them in their first time home purchase, or as down payment for a cottage or vacation property of their own.
How much can I borrow with a second mortgage?
Generally speaking, you can borrow up to 80% of the value of your home, after subtracting the balance on your first mortgage. In other words, you can borrow up to 80% of the equity in your home, depending on the location and marketability of your home. As we work with lenders all across Canada, we offer second mortgages in most major cities and urban areas; however we also have lenders offering second mortgages in rural areas and cottage properties.
How do I qualify for a second mortgage?
Here at 911 Mortgage Brokers – The Mortgage Centre, we provide second mortgages and home equity loans based on your home equity, not on your age, income or credit. Since the inception of our brokerage, we specialize in second mortgages, home equity loans and private mortgages. This experience has allowed us to become experts in these niche mortgages. We have the knowledge and expertise which allows us to consistently obtain second mortgages for our clients at very competitive interest rates and terms.
Which lenders offer a second mortgage?
Here at 911 Mortgage Brokers – The Mortgage Centre, we work with institutional lenders, traditional banks, credit unions, monoline lenders, and private lenders. As such, we have a wide network of lender options which allows us to offer second mortgages of all sizes. Some lenders focus on second mortgages whereas others focus solely on Heloc’s and Home Equity Loans. Some lenders focus on large urban cities whereas others service suburban areas and use a more local community approach.
Our 911 Mortgage Brokers are very familiar with all the second mortgage lenders as well as their strengths and product offerings. This knowledge, coupled with our smart mortgage technology, allows us to match you with the best possible second mortgage lender that best fits your needs, your goals and your lifestyle.
What are the benefits of a second mortgage?
Many Canadians choose to take out a second mortgage on their home. If you have a good amount of equity in your property, a second mortgage may be a great option which will allow you to reach your goals, whether it is consolidating debt, doing home renovations or investing in a second home. Besides helping you reach your short-term goals, one of the main benefits of a second mortgage is that you can borrow funds without changing the terms of your first mortgage, thus saving potentially thousands of dollars in penalties. If you managed to secure a low interest first mortgage, taking out a second mortgage wouldn’t affect this. On the other hand, second mortgages are a significant financial responsibility on top of your existing payments. They are likely to have a higher interest rate than your first mortgage. However, ultimately, taking out as second mortgage is a major financial decision.
Chat with a 911 Mortgage Broker today and kick-start the conversation to see if getting a second mortgage is right for you.
Call Us Today at 289-318-0911 or Toll Free at 1-888-377-0911 for a free confidential consultation to discuss your options.
Our Service Areas
911 Mortgage Brokers – The Mortgage Centre offers services to clients across Toronto and the GTA, Vaughan, King, Aurora, Stouffville, Newmarket, Markham, Richmond Hill, Barrie, Innisfil, Orillia, Collingwood, Oshawa, Ajax, Whitby, Mississauga, Brampton, Caledon, Burlington, Oakville, Milton, Bolton, Hamilton, St. Catherines, Niagara Falls, Windsor, Kitchener, Waterloo, London, as well as far as Muskoka cottage country, Ottawa, Simcoe, and the rest of Ontario.
