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People get a second mortgage or even third, typically to consolidate debt without disrupting their first mortgage. There are many of other reasons however as well.
A second mortgage is a loan taken against a property that already has a primary mortgage. For the lender, the second mortgage carries more risk than the first, and this is reflected in the higher interest rate. The reason why the second mortgage carries more risk is that a default in payment by the borrower which results in the foreclosure of the property will see the proceeds from the sale used to repay the lender of the primary mortgage first. This means that the second lender runs the risk of not receiving full payment on the loan.
A second mortgage will allow you to use the equity which you have built up in your home without making changes to your primary mortgage. Homeowners typically use a second mortgage to consolidate more expensive debt. Even though second mortgages are more expensive than first mortgages they still attract less interest than other forms of debt such a credit card debt, motor vehicle finance and overdrafts. They are also often used to carry out renovations or to pay for education.
If you qualify for a second mortgage you can borrow up to eighty per cent of the value of your home. Traditional banks offer HELOC’s or Home Equity Lines of Credit which is a type of the second mortgage, but if you don’t qualify you would have to approach a private lender for a second mortgage. The big banks generally do not approve second mortgages. HELOC’s are usually only available to those with a high credit score, and you can only borrow up to 65% of the equity in your home.
If you are contemplating a second mortgage in Barrie, contact Turkin Mortgage, and we will help you with information, and put you in touch with the right people.
...pick the one thats right for you.
starting from
6.45%Term | Rate |
---|---|
HELOC | 5.95% (Prime rate) |
Lender | Rate | Term |
---|---|---|
Lendwise |
3.99% | 5 year |
First National Financial |
4.19% | 4 year |
RMG Mortgages |
4.09% | 3 year |
Street Capital Bank |
4.99% | 2 year |
TD Bank |
4.99% | 1 year |
Term | Rate |
---|---|
5 year variable | 4.95% (Prime - 1%) |
3 year variable | 5.1% (Prime - 0.85%) |
Term | Rate |
---|---|
Line of Credit | Starting at 7.2% |
Equity Loans | Starting at 6.5% |
Private Mortgages | Starting at 5.75% |
To qualify for a second mortgage, you will require:
Many second mortgage products are interest-only loans. This ensures that the repayments are lower. The principal amount will be paid off at a later date when the house is sold or additional funds become available. The average interest rate on a second mortgage is around 10% but this can differ substantially depending on the various risk factors.
You will have to pay origination costs on your second mortgage so bear this in mind and discuss it with your mortgage broker. You will also pay for the appraisal and legal fees. Before you commit yourself to a second mortgage you should have an exit strategy.
Speak to Turkin Mortgage about getting a mortgage in Barrie. We have years of experience and we can help you with an estimate of costs and a plan to exit.
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