Second mortgages are a special type of loan that can be very helpful when used in the right situation. A mortgage brokerage, such as One Mortgage Group, can help you select the right type of mortgage or even a second mortgage.
What is a Second Mortgage?
A Second Mortgage is a loan, given in addition to a property that already has a mortgage. When you get a second mortgage, you must make payments on both the primary and second mortgage. Second mortgages can close anywhere from a few weeks or can take up to a month.
A second mortgage is a loan, and the funds will need to be paid back. It is tied to your home, so if you don’t make payments there is a chance you will lose your home. The second mortgage can last anywhere from one to for up to 20 years.
How Does a Second Mortgage Work?
To use a second mortgage, you need to have some home equity. You will be allowed to take out a set amount of equity, leaving some equity in your home. Depending on your mortgage lender, you may be able to take up to 80% to 90% of the home’s equity loan in Toronto with a second mortgage. You borrow against the appraised value of the house, subtracting the primary mortgage’s balance. The total amount borrowed depends on how much equity you actually have in your home.
At the end of the second mortgage’s term, you need to either pay it back or extend the loan for another term.
When Should I Get a Second Mortgage?
If you need to pay off other loans and debts, fund a much-needed home improvement, or make a large, necessary personal purchase, a second mortgage may be the right choice for you. Student loans, credit cards, medical bills are examples of debts a second mortgage can take care of. Some renovations come up that just cost more than what we can afford. A second mortgage could get you the funds needed to fix your house.
If your debt is spread out over multiple payments, you can use a second mortgage to gather all debt into one lower payment.
If you are wondering the second mortgage in Toronto is the right choice for your situation, speak to your mortgage broker at One Mortgage Group. A second mortgage isn’t for everyone and your broker can make sure it is the best fit for you.