When to Consider a Second Mortgage

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Applying for a second mortgage can be overwhelming not only because it is a huge decision but also because it can be a daunting task to determine if it is the right financial solution for your current situation or not. The process can be confusing for a lot of people and some may simply have no idea where to start. If you feel that you are not yet confident about applying for a second mortgage, then read on.

Using Your Home Equity as A Second Mortgage

You must know that once you have a significant amount of home equity, it is an asset that can have a huge impact on several aspects of your life. Most homeowners do not realize that owning a home means sitting on a huge amount of money stored in their home equity and that by being able to access this fund, they can have plenty of freedom to do a lot of things that can improve their lives. This is where a second mortgage comes in. A second mortgage is a loan that a homeowner can borrow against the home equity that they have built up in their home. Once you have access to your home equity with a second mortgage, you can use it for debt consolidation so that you can wipe off high-interest debts and be able to slowly free yourself from financial burden. This is just one advantage and there is more.

Is A Second Mortgage for Any Situation?

A second mortgage may not be for any situation, but it can surely help you out in a lot of situations. It can offer you an opportunity to improve many aspects of your life that could benefit from financial help. Situations that would be perfect uses of a second mortgage include the following:

  • Paying for high-interest debt or debt consolidation. A lot of debts such as credit card debt carry huge interest rates. If you use your home equity to pay off these debts, you can save 20-30% in interest rates alone. Another advantage that you get is you will only have to remember one payment thereafter instead of several payments for several debts in a given month.
  • Improve your home as soon as possible. Home repair and home improvement are both expensive. A simple case of burst pipes could lead to moulds and mean that you’ll have to replace a huge chunk of your wall as well as the busted pipes. By having access to your home equity, you can get repairs like this done as soon as possible and avoid further damage to your home. If you opt for upgrades while repairing, you also bring up the value of your home.
  • Invest in education. Better education means better income potential. With a second mortgage, you can go for higher education for a few months to a few years and secure a better future for yourself and your family.
  • Invest in business or other properties. Simply put, you need money to make money. By using your home equity to add capital to a business or invest in another property, you can build better streams of income for yourself as well as acquire more assets.

Considering getting a second mortgage soon? Contact us and we’ll do what we can to make that happen.

 

How do Second Mortgages Work?

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If you need money and own a home, you can get a second mortgage! Do you need to remodel your home, have bills that you need to pay or many a big ticket item that you want to buy? If so, a Canadian second mortgage could help you get the money you need today for a better tomorrow. Here we’re going to talk about how these work and why you should work with a Toronto mortgage broker like us to get the best deal. Let’s get started.

What is a Second Mortgage?

A second mortgage is a lot like your first mortgage, but a little different. Depending on how much you’ve paid off from your first mortgage, you may be able to delay payment on your second mortgage for up to 25 years. This is where it pays to understand all of the terms of your mortgage, and why you want to work with a Toronto mortgage broker to make things work out in your favour.

When you apply for a second mortgage, you’ll need to fill out paperwork like you did for your first mortgage; you will need to bring some identification documents with you, but we can help you know which one of these you’ll need. After that, we’ll help you go over your application and figure out what areas need improving and if this is the right time to apply for a mortgage. You may want to work on your credit so you can get the lowest interest rate possible (up to 2.75% in some cases!)

Aren’t Second Mortgages Expensive?

This will really depend on the type of lender you go with and their attitude towards you. If you have poor or bad credit, you may be better off avoiding more traditional lenders. This way you’ll be able to get the financing that you need without any of the hassles of being paired with the wrong lender. If you’re looking for a quick loan that you can pay off in a short term (shorter than many 25 year mortgages go anyway), you may want to choose a conventional lender.

Is a Second Mortgage Right for You?

It’s hard to evaluate your case; everyone is different and has their own unique needs! This is why it’s important to evaluate why you want to take out this loan. Speak with one of our Toronto mortgage brokers to see if this is the right choice for you. Some common uses for second mortgages are:

Home Repairs and Remodels: a home repair and remodel can go a long way towards making sure your home is ready to be sold.

Paying off Debts: From credit card debts to private hospital bills, home equity can help you cover it. If you’re in the process of debt consolidation you may need a lump sum for settling your debt.

Bridge Financing: if you’re in the process of buying a home and selling a previous one, you can get a special kind of second mortgage known as a “bridge mortgage” to help you fill in the financing gaps.

Looking to apply for a second mortgage? Click here!

Use Your Home Equity as Part of Your Retirement Planning

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Do you know that a lot of Canadian seniors feel that they cannot rely on just their pension after their retirement? As many as 8 out of 10 surveyed seniors feel that pension plans alone are not enough for them to have a comfortable retirement and are keen to find more ways of making sure that they can have better finances during retirement. A lot of the respondents are homeowners who are open to the idea of using their home equity as part of retirement planning but are not willing to sell their current home to downsize and are not planning to let go of their current home for any reason.

If you are one of the Canadians who are seeking ways to use your home equity as part of your retirement planning, then you are in luck today, as there are several ways for you to achieve that while still keeping your home. If you are not planning to sell, know that your options go beyond just getting a reverse mortgage. Even in retirement, you can take out a HELOC or a second mortgage more so if you are planning to use your home equity to help generate post-retirement income such as in the case of planning to purchase a rental property or choosing to invest in another property.

Selling Is Not Your Only Option

A lot of seniors feel pressured that they are expected to let go of their homes and simply ‘downsize’. Some people may not be willing to do this because they want their family to still have the original home for years to come. Some may want to stay in the same home because they have an emotional attachment to it. No matter what your reasons are for not selling your home to access your home equity, all are valid and there are workarounds for you to enjoy the fruits of your labour whilst keeping your home. Aside from a reverse mortgage, you can opt to get a HELOC or get a second mortgage even after retirement.

The common misconception is that a person needs to be employed to apply for a home equity loan, but the main requirement is to simply have home equity. With this said, if you qualify for a home equity loan or a HELOC after retirement or near retirement, be aware that you still have to pay the loan in the future to avoid losing your home. This can be addressed with smart financial planning and only using the funds from your home equity loan as a supplement or a possible emergency fund – to be used only when necessary or when using it can pay off in the future such as in the case of investing.

Are you near retirement or already in retirement and need assistance with tapping your home equity in 2021? Contact us today and we will be happy to answer your questions regarding this and any other concerns that you may have.

 

When Is the Right Time to Use Your Home Equity?

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The world economy is not yet in a good state and probably will not be back to normal for at least a few months or longer. Even economically strong countries like the United States and Canada are affected because of the crippling effects of the pandemic and other global issues. What does this mean and what can be done to alleviate this issue? One way to help the economy recover is for households to have more purchasing power so that they can use the money to help themselves and channel that money back into the economy. This is easier said than done since a lot of people have lost their source of income and many have still not yet recovered. So, where will the money come from?

Use Your Home Equity Now

A big part of the Canadian population are homeowners. Meaning, that a lot of people have home equity. Home equity is a financial asset that can be used as a source of funding or emergency funds. How can people access their home equity then?

Liquidating home equity is usually done by selling a home but that may not be easy to do now because of recent restrictions that were enacted in Canada to help control the housing boom as well as property prices. Because of this, there are a lot of mandates to navigate, requirements to meet, fees to pay, and needing to have at least a good credit score the qualify for certain things. For people who own home equity, refinancing their mortgage or getting a second mortgage might be an easier way to access their home equity through a home equity loan as opposed to selling their property.

Why Use Your Home Equity Now?

There is a lot of untapped value in terms of residential properties in Canada. The estimated value owned by homeowners sitting in property and houses are in the billions if not trillions of dollars. If a certain percentage of homeowners decide to tap their home equity, that will be money that can be re-injected back into the economy to restart businesses and help things move along as people are still reeling from the economic effects of the pandemic.

There is talk that using home equity could be a bit difficult or challenging for some people, but the truth is that some lenders have come up with less strict requirements these days. One thing to watch out for, though, would be the possibility of shifting policies and other regulations that the government may come up with in response to today’s trying times.

Does it Make Sense to Apply for a Home Equity Loan Now?

Interest rates remain at a historical low which means that the current terms are a lot friendlier for homeowners who might want to get a home equity loan such as A HELOC. With today’s interest rates of only around 4%, it means that someone will only need to pay around $33 in monthly interest if they owe about $10,000 for a HELOC. This figure will slightly vary based on specific home equity loans but gives one an idea of what to expect in terms of paying interest. This is a small amount considering the financial benefits of having an extra $10,000 to use for important matters.

If you’re thinking of using your home equity in 2022, do not hesitate to contact us whether you might be planning to refinance your mortgage or wanting to get a home equity loan. At Mortgage Central Canada, our offices are open to answer your questions and meet your needs. Contact us today.

Getting A Second Mortgage in 2022

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Getting a second mortgage is something that you need to truly think about to decide on properly. After all, it is an additional loan that you’ll have to pay on top of your primary mortgage. Know that delayed payments for a second mortgage can mean losing one’s home plus there are always some additional fees that need to be paid which might mean additional financial strain on your budget.

The past few years brought historically low rates in the mortgage scene in Canada which caused an increase in home-buying activity as well as mortgage refinancing activity. Perhaps this is part of the reason why you are interested in getting a second mortgage now, but just know that there are plenty of things to consider before applying for one. We will talk about these things in this article.

Cost of A Second Mortgage

Applying for a second mortgage has certain fees. There will be costs associated with application fees and some costs which might be added by the lender or the institution from which you are planning to borrow from. There are also appraisal fees, closing costs, recording fees, underwriting fees, and other fees which are specific to your area. Note too that some lenders might charge a second position lien or an insurance fee for the extra risk they will be taking by lending to you.

Uses for A Second Mortgage

You can use the funds for a second mortgage for basically anything that needs a large amount of money. This can be a new business venture, a house renovation that you had been putting off, buying a second property, or pursuing higher education. You might also want to use a second mortgage for debt consolidation as a way to help you save thousands of dollars in interest from high-interest debts.

The key to using a second mortgage is to make sure that the benefits of getting one will outweigh the risks of taking it as a debt. You can consult with mortgage professionals to make sure that getting a second mortgage will be worth your effort, time, and money.

Alternatives for A Second Mortgage

There are other types of home loans that can help you access money from your home equity. A good alternative for a second mortgage is refinancing your home. Refinancing your mortgage will usually give you access to a lower amount of cash than a second mortgage. With this said, this still a better option than getting a personal loan which typically comes with high interest. You can talk with our mortgage professionals at Mortgage Central Canada to find other alternatives for getting a second mortgage.

Important Details to Consider

With everything said above, please take note that a second mortgage is still a type of home debt. It is still an additional financial burden that you need to pay on top of your primary mortgage and getting one can mean taking higher risks of losing your home. Additionally, other loan products such as the other types of second mortgages come with their own set of advantages and disadvantages. You need to assess your financial capability as well as your existing assets and liabilities to pick which loan product would be most beneficial for you.

If you’re thinking of getting a second mortgage in 2022, do not hesitate to contact us at Mortgage Central Canada. We remain open for both in-person and online transactions to meet your needs.

Is It Time to Leverage Your Home Equity?

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If your homeowner with equity, you can cash in and start making equity in your home work for you with a home equity loan. After all, you’ve been saving for years, making your payments on time, isn’t it time you started getting something back? This kind of mortgage, also known as a second mortgage, can help you remodel your home, start a business, pay for retirement, or help you buy a new home. Under the current mortgage rules, you can burn up to 80% of your home’s worth; you may not actually borrow this much though! Here were going to talk about equity, how one of our Toronto mortgage brokers can help you, and if this is the right choice for you.

What Is a Home Equity Loan?

After years and years of payments, you’ve started building value in your home, and that’s equity. The less debt you owe on your home, the more equity you have. As Canada mortgage brokers we can help you unleash the power of your home’s hidden equity to get the money you need for your next project.

But before we talk about qualifying for a home equity loan we need to talk about loan-to-value ratios or LtV. No one will ever get 100% loan to value, even with the 720 or above credit score. You’re most likely to get between 60% and 80%, and you’ll only be able to borrow up to 80% of your home’s value – and that’s after they subtract whatever you still own it. This is why you to have as much equity available as possible.

Who Can Qualify for a Home Equity Loan?

If you have equity you can qualify for home equity loan – the trouble is finding the RIGHT but home equity loan. When you work with us as your Toronto mortgage broker you’ll understand what your real options are. We don’t work for the banks, we work for you, so you’ll know what you’re supposed to be getting. Credit, employment history, and payment history all play a role in your eligibility.

Understanding the Risks of Borrowing

Anytime you borrow against your home there will be risks. What we can do as mortgage brokers is mitigate those risks, helping you understand if now is the right time to get a second mortgage on your home. After all, what’s the point going through with it if you’re only going to end up losing your home?

Let Us Help You

Working with us will help you save time, money, sanity, most importantly your home. We’ll help you understand if your lender is on the up and up, you can find a better deal somewhere else, or if maybe you should just wait to borrow against your home. A little time can do a lot of things for your credit, and the better your credit is, the better your mortgage terms will be. Visit our home equity loans page today, and see how much you could save on your next mortgage!

7 Things You Have to Know About Second Mortgage in Canada

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Getting a second mortgage is becoming increasingly common in Canada these days; however, not a lot of people know what a second mortgage is and how it can help them manage their finances if used correctly.

A second mortgage is a type of loan that allows homeowners to access their home equity provided that they can meet the terms set by the lender. Because a second mortgage is a loan that uses home equity as collateral, defaulting on it can mean losing one’s home. This is why you must know what you’re getting into if you’re planning to apply for a second mortgage. Before you try to find a lender, below are what you need to know about getting a second mortgage in Canada.

Bad Credit Can Be Fixed With a Second Mortgage

Consolidating multiple high-interest debts can help you pay them off faster and improve your credit score in the process. More so, getting a second mortgage even with bad credit is possible through private lenders.

Second Mortgages Come in Different Forms

There are different types of second mortgages, with a HELOC and a home equity loan being the most common. They come with different terms to meet varying needs and demands. Be sure that you pick the type that is in-line with your financial plans and status.

Interest-Only Payments Are Possible

Some second mortgages allow you to pay only the interest until the time that you decide to sell your home. This means that you can take out a second mortgage to help you finance a home renovation prior to selling so that you can sell your home for a higher value. You can then pay the second mortgage from the proceeds of the sale.

Borrow as Little or As Much as Possible

Second mortgages come with a ceiling amount or a borrowing limit that is usually based on how much equity you’ve got in your home. It is possible to tap as much as 80% of your home equity in a second mortgage with the right lender!

It is Not Free

Second mortgage fees do exist and you’ll have to consider them when weighing whether you should get a second mortgage or not. The good news is that mortgage professionals may be able to connect you with the right lenders so that whatever fees you end up paying will still be outweighed by the benefits you’ll be getting.

Interest Vary Widely

Different lenders use different interest rates depending on the type of second mortgage you’re applying for and other factors. You have to be sure that you compare lenders to get the best mortgage deal.

You Can Use Your Second Mortgage for Anything!

Funds from a second mortgage are usually used for debt consolidation. You can also use it to finance further education, invest in a business, renovate your home, go on your dream vacation, or even pay for huge medical expenses. Ask your mortgage professional for more uses for a second mortgage! Contact us today if you need help getting a second mortgage in Canada!

8 Common Questions About A Second Mortgage

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It is nearly impossible to have never heard of a second mortgage these days. Perhaps you’ve heard enough to start wondering why more people are getting a second mortgage or getting curious to know how getting a second mortgage may benefit you. We’ve compiled the answers to the most frequently asked questions regarding second mortgages here.

Are There Types of Second Mortgages?

There are several types. The most common ones are HELOCs and home equity loans. A second mortgage that is given as a lump sum is categorized under general home equity loan while one that is given as a revolving line of credit is called a HELOC.

What Collateral is Used?

The value that you own in your home, or your home equity, is the collateral used in a second mortgage. This means that not paying can result to foreclosure so you better be sure to read the terms before getting one.

What Are the Common Uses for a Second Mortgage?

Debt consolidation of high-interest debts and paying for home renovation are the most common reasons cited by those who apply for a second mortgage.

Are Interest-Only Payments Possible?

Yes, paying for just the interest on a monthly basis is possible for some types of second mortgages. This is a useful feature to look for when you’re planning to pay for the loan after getting an expected huge windfall or after you’ve sold the home.

How Can You Use Funds from a Second Mortgage?

Once approved for a second mortgage, you are free to use the funds however way you want. You can use it to invest in a business, invest on the home by paying for renovations, pay for expensive tuition fee, finance a lavish wedding or grand vacation, consolidate debt, and more.

Is There a Limit to the Amount That Can Be Borrowed?

Generally speaking, you may borrow up to 80% of the value of the home equity that you’ve built up. This means that if you have $100,000 home equity, you can access as much as $80,000 in the form of a second mortgage.

Are There Fees to Pay?

Besides the interest, you’re expected to pay certain fees depending on which of the types of second mortgages you’ve applied for. This is best discussed with a mortgage professional so you can have a better grasp of what fees you can expect and how much.

Are There Differences in Interest Rates?

The different types of second mortgages come with different interest rates. The biggest factor affecting this is the risk that the lender is taking by lending money to you. There are also instances that the same types of second mortgages will have varying interest depending on the terms set by the lender. For this reason, make sure to compare interest rates before finalizing your second mortgage application.

Do you have more questions about getting a second mortgage? Feel free to contact us so that we can address your queries. Our mortgage professionals will be happy to respond to additional questions you may have about applying for a second mortgage.

 

4 Fast Tricks to Build Home Equity

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Building your home equity is one way to build wealth. After all, your home equity can be used as an emergency fund or even as funding for your next home. But how easy or how challenging is it to build home equity? What can you do to make sure that you gain equity the fastest ways?

Home equity grows over a period of time as you continue to pay your mortgage. It also grows when home prices in your area goes up as it is defined as the difference between what amount you owe and your home’s market value. For the fastest ways to build home equity, take a look at the tricks below.

Start With a Large Downpayment

Although paying the least amount for the required downpayment when buying property is tempting (more so if you have great credit), it will be in your best interest to go for the biggest downpayment that you can afford. A large downpayment means that you own a larger portion of your home’s value from the start, therefore letting you start home ownership with a substantial equity.

Pay More Toward The Amount You Owe

Paying more towards your principal will help you pay your home loan a lot faster. Do you know that just paying an extra month of mortgage payment per year can shave off 7 to 8 years of payments from your payment schedule. Paying off your home quicker means building equity at a faster rate.

If you’re not sure whether you’ll be able to afford paying an extra month a year, then start with paying a little over your required payment per month. The idea is really to just pay more towards your principal to cut your loan quicker. You’d be surprised at what an extra $100 and above per month can do.

Go for a 15-Year Mortgage Loan Instead of a 30-Year One

It is a common misconception that choosing a shorter-term mortgage loan means having to pay twice the monthly payment required for say, a 30-year loan. Once everything has been computed, you’d be glad to know that choosing a 15-year loan over a 30-year one can mean paying just a few hundred dollars more per month.

Although coming up with a few hundred dollars more per month may seem like a huge adjustment, the point here is to consider asking for computations based on shorter term loans. You might just be able to afford it and also allow yourself to build your home equity faster.

Choose Home Improvement Projects Wisely

Anything that can boost the market value of your home is a way to build home equity. This means that any renovations and additional features or upgrades you do will increase both the value of your home and your home equity.

The key here is to invest in home improvement projects that won’t empty your bank account yet give you huge returns. Examples are upgrading kitchen appliances (that can drastically increase your home’s value) or even just investing in some new turf for your front lawn (which adds a few thousand dollars to your home’s market value) for landscaping.

Now that you know how to build your home equity, it will also be great to know about how to use home equity to benefit you financially. Learn about second mortgages and the benefits of home equity loans by talking to us. Contact us if you would like to discuss more tips about using your home equity today!

10 Smart Tips to Build Home Equity

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Building one’s home equity is one of the most searched terms by homeowners these days as more and more people are becoming aware of how important it is to invest in their home. Below are 10 smart tips on how you can build home equity.

Increase Your Mortgage Payments

Making larger mortgage payments per month means that you’ll be able to pay your mortgage sooner by building equity faster. The more monies that actually go into the principal, the bigger your equity becomes.

Choose High Value Home Improvement

Smart home improvement choices increase the value of your home thereby also driving up your home equity. Choose home improvement projects that have a higher expected value than what you spend on it and you’ll be in good hands.

Support Changes that Increase Home Price

Anything that can drive up your home’s value will also increase the equity. Examples are better infrastructure and amenities in the neighbourhood, a new park, a new train station, or schools nearby that rank high. Support local improvements in your neighbourhood to indirectly increase your home’s market price and your home equity.

Start with a Bigger Down Payment

The bigger the downpayment you put in, the lower will be your loan-to-value ratio and the better interest rates you’ll get. Low interest means being able to pay off your mortgage sooner while building home equity faster.

Shave Your Mortgage Balance

Paying your mortgage bills on time each month means that you’re paying towards the principal of your mortgage (if it is not an interest-only loan). Any amount that goes towards your principal is going into building your equity.

Opt for a Biweekly Mortgage Payment

Paying your mortgage every 2 weeks means paying it off faster and building your equity in the process. This option also has a lower interest rate so more of your payment goes into the actual mortgage instead of just the interest.

Invest in Maintenance

Keeping your home in the best shape possible will mean that you’ll either retain or grow the value. Doing that directly translates to building home equity.

Choose a Shortened Mortgage Term

Refinancing at a shorter mortgage term will increase your payments but you’ll also save on interest aside from being able to build your mortgage faster.

Improve Your Curb Appeal

Making your home look good will give it a higher market value, therefore increasing your home equity. Landscaping, better lighting, some flowers, and an inviting front door can work wonders!

Avoid Repeated Refinancing

Building equity is not just about increasing it but also retaining it. Repeated refinancing will suck your equity dry, not something you’ll want to do when you’re trying to build it.

Want to consult with experts about the best ways to use your home equity in the future? Contact us and we’ll be happy to talk to you about using your home equity for a loan and building your assets.