How Do You Get a Second Mortgage in Ontario?

How Do You Get a Second Mortgage in Ontario?

A homeowner who has built up equity over time can qualify for a second mortgage. This is a type of loan that uses your home as collateral. Like first mortgages, it has to be repaid and the terms are usually shorter – about 1 or 2 years. Since the loan is secured by a physical asset, the interest rates are typically lower compared to credit card rates. This is why several homeowners take out second mortgages and use them to their advantage. 

Why Canadian Homeowners Obtain Second Mortgages

Homeowners get second mortgages for several reasons:

Pay Off Credit Card Debt

There are advantages to working with a professional mortgage broker. With our expertise, we can help you find a lender that can offer better interest rates. The average interest rate for a credit card is 15% compared to much lower interest rates with a second mortgage. What homeowners do is get a second mortgage and pay off their credit card debt. You could benefit from saving money and interest over time when you go this route. 

Investing the Second Mortgage

Some homeowners realize the potential of having second mortgages. What they do is buy a rental property but instead of saving for a downpayment, they use the equity of their home instead. It’s a good option for Canadian homeowners who want to make extra income out of their real properties. The good thing is: the interest of your loan becomes your tax deduction. 

Home Renovations

Considering putting your home on the market? Why not make upgrades or renovations so you can increase its value? You can also use the second mortgage for simply upgrading your home. 

Debt Consolidation

If you have other financial obligations such as unpaid loans and credit card debts, there is a way to better manage them through debt consolidation. With your second mortgage, you can pay off all your debts and turn them into one affordable payment option that is a lot easier to manage. Having multiple due dates can be stressful — by consolidating them, you only have to worry about paying for your second mortgage.

The good thing about second mortgages is – it has fewer restrictions. You can actually control how the money used. Some Canadian homeowners would obtain second mortgages to pay for their child’s education, use it for home improvement or to build their emergency fund, etc. We would, of course, advise Canadian homeowners to use it well. Let your money work for you by investing it into something that can also give you returns. 

How 2nd Mortgages Help You Repair a Bad Credit

Obtaining a second mortgage can help some homeowners improve their credit scores. If you are serious about improving your creditworthiness, consider obtaining a second mortgage and pay off all of your overdue bills. This will help you restore your finances and improve your monthly cash flow. Call us if you need more assistance. 

How Second Mortgages Work

Canadian homeowners who have built up their equity are allowed to borrow up to 80% of that amount. Unlike first mortgages, it is easier to get approved for a second mortgage. So long as you have equity built up, you should be able to get fast approvals for your loan. It can be tricky though, especially when you apply for a second mortgage through banks. Traditional banks would look at the borrowers’ credit scores and based their decision on their credit history. Consequently, you can still get a second mortgage albeit you have bad credit. 

With the second mortgage, you can get a lump sum of cash – which is a portion of your equity (up to 80%) and pay it over a term of 1 or two years. Another type of second mortgage is HELOC or home equity line of credit. A HELOC is a line of credit that allows you to access the equity in your home. It works just like a credit card so you can access money whenever you need it.

When applying for second mortgages, you can either go with banks or through private lenders. With banks, you will need to have a good credit rating to get approved. If you decide to go with private lenders, it’s important to consider the fees and the interest rates offered by them. We would highly recommend that you work with a professional broker as they have worked with several lenders in the past. They can target those lenders that can give you better terms. 

Borrowers with bad credit or who have low income can still get approved for a second mortgage through a private lender. However, they will need help from a professional broker. We have access to multiple lenders and we know who is likely to offer you a second mortgage with your home as collateral. 

Some homeowners think it’s difficult to obtain a second mortgage. It’s quite easy so long as you work with the right team of professionals who can better assist you.

How LendToday Can Help

Applying for a second mortgage can be stressful for some homeowners. It may take longer as you need to still compare rates and fees of different lenders and banks. We can make the entire process hassle-free when you hire us as professional brokers for your second mortgage. 

LendToday has assisted homeowners for several years with alternative financing options. We work with clients who think it may not be possible to obtain a loan. Our team operates across Canada and we have access to more than 50 lenders. Our goal is to help you – our client – get approved for a second mortgage fast and with better interest rates. With our expertise, we ensure a smooth process regardless of whatever loan you are looking to obtain. 

To learn more about how we can help with a second mortgage call us at 1-855-242-7732 or simply apply online