Second Mortgage Facts you need to Know!
Do you need to use the equity in your home? Are you looking for a convenient way to access cash for home renovations, business investment, or debt consolidation? Then you may be considering a second mortgage. With a second mortgage, you can borrow against the equity in your home without breaking your current mortgage, thus avoiding unwanted penalties!
But how do you know if a second mortgage is the right product for you?
The answer really depends on the borrowers specific circumstances! Here are 4 facts you need to know about second mortgages before making the decision.
They provide quick lump sums of cash.
They can quickly provide you with a large sum of money to use!
However, if for some reason you become unable to make your payments on the second mortgage, you may risk bankruptcy or foreclosure. You need to decide if you truly require a second mortgage to get the cash you need or if there are other options that are less risky.
Private lenders are often a better source for second mortgages!
Typically, it will be easier to get a second mortgage through a private lender than a bank, additionally, you can typically borrower larger amounts than a bank would provide. Your best option is to work with a mortgage agent, like myself, to find out what’s best for you. I have access to a large pool of lenders and will be able to build the relationship with the lender that can best suit your needs.
Keep in mind however, that private lenders are usually willing to take bigger risks than major banks, and because of this they will often charge a higher interest rate.
Comparing Second Mortgage options against Refinance Options is always advised!
You should compare both second mortgages and refinancing options to see which solutions provides you with what you need, at the lowest cost.
Depending on your existing mortgage agreement it may be more cost efficient to refinance. If you are close to the end of your term, and your existing mortgage has a higher rate of interest, refinancing may not cost you as much as a high interest second mortgage.
On the other hand, if you are early in your term on your first mortgage, you would likely have to pay quite a high penalty to break it and therefore a second mortgage is more likely the better choice.
When considering a second mortgage, you should also consider what your exit strategy will be.
Having your mortgage fully paid off will bring a lot of financial freedom, while a second mortgage can help you in a time of financial need, it is still a debt, at a high rate of interest. Therefore, it is important that a plan for how you will pay off your second mortgage as quickly as possible, be established prior to committing to a second mortgage.
Talking to a mortgage agent, like myself, will help create this plan, and help you get the equity in your home working for you!!
If you require more information, or want to get started, contact me any time!
Meghan Van Houten – Mortgage Agent
416-709-9062 | 1-877-366-3487
AKAL Mortgages Inc
Independently owned and operated
202-120 Traders Blvd. E., Mississauga ON L4Z 2H7