Turn Your Home Into A Piggy Bank by Borrowing From Your Home Equity

Finances can be tight these days for a lot of Canadians. Luckily, if you are a homeowner in Canada, you can tap into your personal bank by making use of your home equity via a second mortgage or a home equity line of credit.

Most people think of owning a home as an investment and they are right, but not a lot of people think of their home as a handy source of funds in a time of need. Yes, it is possible to get some cash out of your home without having to sell your property by accessing your home equity.

Use Your Home Equity

First, what is home equity and how can you use it? Your home equity is the value that you own in your home. You can easily estimate your home equity by subtracting any remaining mortgage or debts from the current market value of your home. You can access it by applying for a second mortgage or a home equity line of credit. These are types of secured debts that use your home equity as collateral and therefore would have much friendlier terms as well as interest rates as compared to other loans.

HELOC versus Second Mortgage

Both a HELOC and a second mortgage allow a homeowner to access their home equity by getting a loan secured against it. With a second mortgage, the funds approved for the loan are approved as a lump sum and the monthly repayments are a fixed amount. With a home equity line of credit, the homeowner is given a line of credit that they can withdraw from as they see fit at any time during the loan period. Payments for a HELOC vary by month and the interest rate often varies as well.

The beauty of a second mortgage lies in its predictability as well as the lump sum access to the loaned amount. People who apply for a second mortgage often use the funds for big expenses such as paying for a home renovation. Compared to a second mortgage, a HELOC is more flexible. This can be advantageous for people who need extra cash every now and then in the near future. They can repay what they use in the HELOC’s credit limit and are only charged interest for the amount they borrow. Flexibility is why a lot of people choose to get a HELOC over a second mortgage.

Uses for A Home Equity Loan

A second mortgage and a HELOC are both home equity loans that can give temporary financial relief to homeowners when they need cash that cannot be covered by savings alone. Instead of applying for a regular loan or using a credit card that comes with sky-high interest, a home equity loan is friendlier for your pocket and oftentimes easier and faster to process. Funds from a HELOC or a second mortgage can be used to pay for school, fund home renovations, jumpstart a business, or pursue a life-long dream.

Borrow from Your Home Equity in 2021

Almost nothing has changed when it comes to borrowing from your home equity. With Mortgage Central Canada, you can start the home equity loan application process from the comfort of your own. If you’re a homeowner and have the requirements in place, processing can be as fast as a single day! Contact us today!

 

What You Need to Know About Getting a Home Equity Loan

With the steadily rising home prices at present (more so in key cities), it isn’t far fetched that you’re probably sitting on a huge equity especially if you’ve been paying your mortgage for about 10 years or more. Tapping into your home equity by using a home equity loan can give you a huge advantage in paying off high-interest debts and affording some expenses without having to sell your home.

Do you know that approximately 10 million homeowners will take a home equity loan between 2018 to 2022 as predicted by a TransUnion study? That’s double the numbers from 2013 to 2017! What better time than now to understand how equity loans work and find out what you need to know in order to get one?

Know Your Credit Score

Your credit score is a key factor in determining whether your loan will be approved or not, so finding out your credit score is a must more so if you want to really plan out your options just in case a line of credit or a home equity loan may not come into fruitition.

Find Out How Much Debt Do You Have

The current debt that you have may become a hindrance to your securing a loan. Although a lot of people get a home equity loan for debt consolidation, wanting to do the same may not sit well with some lenders. Lenders lend you money so that they can get interest in return. They know they won’t be getting any if your existing debts are eating up 43% of your income or more.

Determine Your Equity

Your equity will let you know about how much you can tap by getting a home equity loan or a line of credit. Do this after the initial steps above. To simplify, you need to have an estimate of your home’s current value and subtract how much you still owe from that. Reduce the answer to 80% of your numbers and that will be the maximum a lender is probably going to lend you. Plan around that accordingly to avoid surprises and determine if the effort of filing and fees will be worth it.

Why Are You Getting A Loan?

Assess why you are getting a loan and what you can do besides applying for a home equity loan. Find out what are the types of home equity loans and determine which will fit your needs and goals better. Do you need a huge lump sum payable in the next 5 to 15 years? Then a home equity loan is the right option for you. If what you need is extra funds for repeated expenses, a line of credit can help ease your financial burden for about 10 years.

Want to talk with Canadian mortgage experts about ways to use your home equity in the future? Talk to us and we’d be happy to walk you through the various details of applying for a home equity loan as well as the benefits of home equity loans.

 

When to Consider a Second Mortgage

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?

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

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?

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

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?

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

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

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.