2019 Guide to a Second Mortgage in Ontario and the GTA

Spring is here! Like many other individuals, you may be contemplating about getting a second mortgage this year and asking yourself whether it will be worth it as well as what are the things you need to know. Well, you’re in luck today if you’re seeking more information about second mortgages!

Second Mortgage Definition

A second mortgage is a secured loan, with the security being the value of the homeowner’s property. It is not the same as a primary mortgage and is paid separately. A second mortgage is also the term used for any other loan secured by the home’s equity no matter how many similar loans there are.

A second mortgage is considered a mortgage because the term refers to any loan secured by real estate as collateral and need not be used for the purchase of the home itself.

As mentioned earlier, the term second mortgage applies to any home loan taken after the primary mortgage. If a second mortgage is subject to foreclosure, the primary mortgage is paid off in full first and what is left is used to pay the second mortgage.

Second Mortgage Rates

Rates for second mortgages can vary from lender to lender. An upside is that the interest rate is markedly lower than other options for loans such as unsecured personal loans or credit cards. This is because a second mortgage is backed by home equity; hence, there is some security for the lender. In comparison to a primary mortgage, the interest rate for second mortgages is still a bit higher because they carry more risk with everything considered.

Some second mortgages may have a fixed interest rate and some may have a variable rate. Having a variable rate mean that rates are adjusted from lower to higher based on market condition. Having a fixed rate just mean that payments are predictable because the interest rate remains the same throughout the course of the loan.

Types of Second Mortgages

There are 3 main types of second mortgages, home equity loans, piggyback loans, and home equity lines of credit.

  • A piggyback loan is a way to save money by splitting the purchase of the home into 2 different loans.
  • A home equity line of credit is a loan from which you can draw from many times over as you need.
  • A home equity loan is a lump sum loan taken against the value of the house.

Get a Second Mortgage in 2019

Second mortgages under HELOCs and home equity loans require that the homeowner owns a significant value of equity in the property. Some lenders require a specific credit score, income bracket, steady employment, and other data. Some lenders are more lenient and will lend money to someone who may be self-employed or have bad credit. You just have to understand the terms and make sure to read any fine print before getting a second mortgage from a lender.

Are you applying for a second mortgage soon? Contact us and we’ll help you assess whether it is the right type of loan for you! Wherever you may be in Ontario, the GTA, or Canada, our mortgage professionals are within easy reach. Talk to us soon!

How to Use Your Home Equity in 2019

People have been using their home equity as a source of emergency funds or as a backup savings plan for years, but not a lot understand how it really works. If you haven’t tapped your home equity yet, 2019 might be the year to consider tapping your home equity for huge bills, consolidate loans, or pay for expenses that your savings or income can’t cover.

Building up your home equity by diligently paying your mortgage is a smart move that builds up this asset of yours over time. Once you’ve accumulated a significant amount of home equity, you can use it for any of the following!

Debt Consolidation

Consolidating your debts to start the year is a smart move towards better management of your finances. By consolidating your debts, not only will you make it easier for you to get your debts paid but you will also save money on interest. You can use your home equity to finance your debt consolidation. Just ask us how!

Home-Equity Line of Credit (HELOC)

A HELOC is a line of credit that acts like a credit card but instead of a credit limit, you are given access to a certain amount of your home equity. You are free to use as little or as much of the HELOC as you want as long as you are able to make payments according to the terms. New terms are currently in the works for HELOCs these days so be sure to consult with us whether a HELOC will be advisable for you.

Refinancing Your Mortgage

Refinancing your mortgage involves renewing your current mortgage so that you can use your home equity to access a cash amount. For instance, you have an initial mortgage of about $500,000 and you were able to pay about 70% of it, that will give you $350,000 in home equity. However, if the real estate prices in your area have increased, your home equity can be a lot more than that. In this situation, refinancing your mortgage makes sense to create a new mortgage loan to replace your current one in order to access some of your home equity as well as make payments easier for you. Know that specific steps have to be carried out to refinance your mortgage (like getting a home appraisal), and there are other fees that you’ll have to pay too.

Second Mortgage

A second mortgage might be a good option for you if you have an existing mortgage but don’t want to refinance. In a second mortgage, your house is your collateral and you still have to pay off your primary mortgage so you have to be sure that you can afford paying two mortgages at the same time to avoid possibly losing your home to foreclosure. We have some articles on what you have to know about second mortgages but feel free to reach out to us should you have additional queries.

Use Your Home Equity in 2019

It is up to you to determine which is the best way to access home equity for yourself this year based on your financial situation and other personal factors. If you need professional help to assist you in assessing your options, contact us at Mortgage Central Canada and we’ll surely help!

Get a Bad Credit Loan in Canada for 2019

Getting a loan when you have outstanding debts, been refused for a credit card, had past issues with loan payments, or declared bankruptcy can be very tricky. However, it is possible to still be approved for a loan because bad credit does not only affect you but also more than a million other Canadians.

Bad Credit Loans Approval in Canada 2019

Applying for a personal loan with bad credit does not mean that you have no choice. The fact is, there are plenty of lenders who would approve bad credit loans. The tricky part is in identifying these lenders and reaching out to them. That’s why we’re here at Mortgage Central Canada!

It is possible to get a loan even with bad credit because lenders have different requirements for a person’s income, credit history, and other factors. When you apply for a loan, your lender will check your credit history and see your personal financial data such as any defaulted debt, recent declaration of bankruptcy, and your credit score. Banks often have very strict requirements and immediately decline anyone who does not meet their requirement even in instances where the borrower nearly meets the requirements.

Bad credit lenders are more lenient than banks and usually look at the whole picture. This is because they are often private lenders who are free to set their own criteria for approval. Being alternative lenders allow them to approve personal loans for people with bad credit.

Why Choose Private Lenders to Borrow from When You have Bad Credit

Private lenders do not discriminate, unlike banks. Even with a recent bankruptcy, delinquent credit account, defaulted payables, and other issues, it is possible to find a lender that will provide a loan to you.

If you’re a homeowner, we can connect you with bad credit loan providers at Mortgage Central Canada. Some have guaranteed approval and some may ask for more details. The fact is, it is possible to get a secured loan with our help.

Benefits of a Bad Credit Loan in Canada

A loan doesn’t have to be a negative mark in your financial history. Many Canadians benefit from getting a bad credit loan because it allows them to:

  • Build their credit score by repaying on time. By doing this, qualifying for other loans in the future will be much easier. Interest for future loans will be significantly lower too!
  • Borrow thousands of dollars at a time so that they can consolidate their smaller loans or choose to spend it for an emergency.

Get a Bad Credit Loan the Smart Way

Just because you can get quick approval for a bad credit loan does not mean that it will be a smart decision to grab a loan from the first lender you come across with. You must make sure that you can pay both the principal and the interest by going for the lender with the best rate. Read the fine print of any document before signing so you will not fall for extra fees that you are not aware of. Also, ask about penalties for late payment and missed payment as well as possible penalty for prepayment.

Contact us when you’re ready to apply for a bad credit loan!