Do you know that one of the most popular reasons that Canadians tap into their home equity is to use the extra cash to buy a second property? Although having a second home may sound excessive to some, having a second home can mean a lot of things to different people.
Why Buy A Second Home?
Some people buy a second home to have a place to unwind in, such as a cottage or a summer home. Some people purchase a second property as an investment or a source of income such as in the case of rental properties. With the recent changes in the housing market and how difficult it may be for young couples to buy property, some parents buy a second property to give to their children, taking advantage of their long-established financial record to avail of better deals in the real estate market. With interest rates now at record-breaking lows, 2021 truly sounds like a great time to buy a second property and even better when you can do so with the help of your home equity!
Financing A Second Property with Home Equity
Unlocking your home equity is one of the best-kept secrets that homeowners have when it comes to buying a second property. Whereas some people may feel that they need to have hundreds of thousands in savings in order to put a deposit for a house, or some people think that they need to sell their current home to finance another one, the fact is that you can tap your home equity with a home equity loan and you’ll be able to turn your hard-earned asset into cash without having to let go of your current home.
There are several ways that you can unlock the equity in your home. You can choose to refinance your mortgage, apply for a HELOC, or opt for a home equity loan or a second mortgage. All of these choices will do a great job in unlocking your home equity, but they differ in how they can help you achieve your financial goals plus how they relate to your current financial situation. Each option got terms, conditions, fees, and other requirements that you may or may not qualify for. Some will put a lot of consideration on your credit score and income sources while some will basically only look at your home equity.
With the above said, lenders are much more lenient when the borrower is applying for a secured loan and much more so when the collateral is one’s home. They know that lending to people who are willing to put their home on the line have significantly lower risks than lending to other borrowers when it comes to non-payment or defaulting. More so, lenders know that someone who will use the cash to buy another home is likely someone who plans ahead when it comes to finances and thus, is also more likely to be approved fast.
Are you interested to use your home equity to purchase a second property? You can apply for a second mortgage, a HELOC, or get a mortgage refinance with our assistance. Contact us to avail of our 24-hour evaluation!