If you’re looking to use your equity to get a fresh start, find out to get a second mortgage in Pickering Ontario. Durham region’s town of Pickering is one of the most unique places to live in the area. Not only are you in close proximity to Lake Ontario, but you get to experience small-town living while being close to amenities. Many families choose to move to Pickering each year to live a laid-back lifestyle.
If you already live in Pickering and are looking to renovate or refinance your home, a second mortgage is a viable solution for you. The process of obtaining a second mortgage may be confusing at first. However, as one of the most common borrowing routes for homeowners, it’s a feasible option for most people.
This guide will go over what you need to know about second mortgages and how to qualify.
What is a Second Mortgage?
Another term for a second mortgage is equity borrowing. It’s an additional loan that’s secured with your home equity. It doesn’t affect your current first mortgage contract or terms with your lender.
Home equity refers to the difference between the current market value of your home and the remaining amount you owe on it.
Equity in your home is a huge asset for your personal finances. Many homeowners don’t realize how much equity they’ve built up over the years they’ve owned their homes. You can secure a large number of funds with a second mortgage.
When you have a second mortgage, you continue to make payments on your first mortgage as well. The amount you borrow with a second mortgage is typically lower than that of your first. You can usually borrow up to 85% of your home’s total appraised value.
You’ll receive your funds in a lump sum when you get approved for a second mortgage. You’ll make payments over a specific term at a variable or fixed rate. This second mortgage has to be paid off before you can take out another mortgage against your home’s equity.
What Can I Use a Second Mortgage For?
In addition to conducting renovations or refinancing your house, you can use the funds from a second mortgage for a variety of things.
- Debt consolidation
- Additional cash flow
- Subsidized mortgage payments
- Fix home repairs
- Pay off student loans
- Purchase investment properties
- Make car payments
If a second mortgage sounds like something that would benefit you, contact a mortgage broker in the Pickering area to help you through the process.
How to Qualify for a Second Mortgage in Pickering Ontario
You’ll need to go through a similar approval process with your second mortgage as you did with your first. You don’t get automatically approved just because you currently have a mortgage.
Banks and lenders will evaluate the following:
- Employment history
- Financial information
- Credit history
When going through the approval process, the lender will look at the “total loan to value.” This is because they’re evaluating both mortgages against your current home’s appraised value.
A home appraisal is a key step in the approval process for a second mortgage. An appraiser will determine what your home’s market estimated value is. This plays a key role in determining how much money a lender will offer you.
Find a Reliable Lender
It’s easy for people with good credit and more than 20% equity in their house to qualify for a second mortgage. Comparatively, some homeowners are unemployed, self-employed, have a low income, or have bad credit.
The brokers at LendToday have experience working with all types of homeowners. We can connect you with reliable and trusted lenders that are flexible in their lending requirements. We’re committed to helping you find a solution.
Considering a second mortgage
A common reason for applying for a second mortgage is to have cash on hand that you can use for a variety of purposes. Another reason is that second mortgages are easier for those with poor credit to secure. This is a great option if you need more financial flexibility.
If you have a credit card and/or personal loan debt, you can consolidate that with a second mortgage. You’ll benefit from lower interest rates and being pulled out of collections.
Tax debt is a problem for many Canadian homeowners. By taking out a second mortgage, you can work with the Canada Revenue Agency. Catch up on your property tax arrears and stop liens on your property.
Sometimes people need short-term financing to get through a rough patch or to cover unexpected expenses. Moreover, a second mortgage is a great option that’s much easier and faster than other types of financing.
What’s the Difference Between a HELOC and a Second Mortgage?
A Home Equity Line of Credit (HELOC) is similar to a second mortgage but does have major differences. It functions as a credit card would. How much money you get depends on your home’s value.
With a HELOC, you can use as much of it as you like at any given time. The interest rate is variable and can fluctuate on a daily basis based don’t the amount borrowed. Your monthly payment amount also varies based on the interest rate and how much money you’ve borrowed at that time.
Borrowing only the amount of money you need helps keep your monthly payments low. Equally as important, with a second mortgage, you can borrow as much as 80% of the property’s value.
Whether you go with a second mortgage or a HELOC depends on your needs and meeting a lender’s requirements. Our qualified brokers will speak to you about both options, helping you make the right decision for you.
Apply for a Second Mortgage With LendToday
A second mortgage is a great opportunity for homeowners to tap into their home’s equity. Make the most of the capital you’ve built up by exploring your financial options.
Apply for a second mortgage in Pickering, Ontario today on our website.