Is a second mortgage right for you?
When people think of a second mortgage, they usually think of high-interest rates, large fees and a big loan shark preying on their property. But, in reality, a second mortgage can be a great way for homeowners to fulfil other endeavours without having to sell their home.
A second mortgage is a type of loan that allows you to borrow against your existing home loan. It is an additional loan taken out on a property that is already mortgaged. And, yes, they do come with a slightly higher interest rate but only because it’s considered a riskier investment than a first mortgage.
However, these rates are still significantly lower than high-interest credit cards, car lease payments or unsecured lines of credit. Your home is possibly your biggest asset, and over time that asset becomes more valuable. The value gained is equity that you can utilize to fulfil other financial goals or projects.
A second mortgage can help you consolidate your debt and improve your credit score, allowing you to qualify with a prime lender sooner than you would otherwise. Beyond debt consolidation, a second mortgage can be used to finance other life events such as higher education, vacations or home improvements.
At Everything Mortgages, we have access to a network of second mortgage lenders, both institutional and private. Our mortgage specialists can match you with a lender in as little as 48 hours regardless of your credit, income and employment history.
Quick facts about the second mortgage
Higher approval rates
Lenders offer more lenient qualification requirements.
Shorter loan terms
Lending is short-term ranging from 6 months to 1 year.
Quick turn-around times
Closing can be as quick as 48 hours.
Lending rates typically start at 5.99%, which are lower than other high-interest credit options.
You may pay a fee of 1.5% to 2%.
How can you use a second mortgage?
- Debt Consolidation
- Credit Improvement
- Home Improvement
- Bridge Loan / Deposit on Home Purchase
Frequently asked questions
Self Employed Mortgage
Who is a self-employed borrower?
You! If you’re a contractor, consultant, freelancer or entrepreneur who collects invoices rather than employment pay stubs, you are self-employed. Technically, “self-employed mortgages” don’t exist. You will get approved for the same mortgage as everyone else but, you may have to jump through a few more hoops compared to a payroll employee.
How can I qualify as a self-employed borrower?
The primary difference between self-employed (or commission-based) and salaried employees is that lenders will treat your gross earnings differently. As a rule of thumb, lenders will only use 80% of your gross earnings and the average of last tax year’s income for commissioned sales people, and net income, instead of gross income, for self-employed individuals. `A lender is restricted by Canada Mortgage and Housing Corporation (CMHC) rules to use only the last three years of self-employment income
What is considered qualifying income?
Self-employed workers typically obtain their mortgage through stated income applications, which require a signed income declaration and proof of self-employment. Stated income is how much you claim to earn. If you keep most of your income inside your company, we can qualify you for a mortgage using the gross deposit of business income over the last 12 months or allowing for retained earnings within your corporation. We can even qualify you with some lenders with as little as six months as business for self.
What income documents will I need?
Lenders will require: Your last two years of full T1 Generals and the associated notices of assessment If incorporated: your whole articles of incorporation If sole proprietor: your business or HST registration Last six months of bank account statements
How long do I need to be in business to qualify for a mortgage?
Most lenders require at least a two-year track record for businesses. Lenders have been known to make exceptions for professionals like doctors and engineers, as well as people starting a new business in an industry where they’ve already had a long career.
If my business produces a seasonal or irregular income, can I still qualify?
Yes, the same income requirements apply as if you earned a full-year income.
If you are a self-employed individual looking for a mortgage, it would be in your best interest to gather the required income documents and begin a mortgage pre-approval process with us. Contact us to speak with one of our self-employed mortgage specialists to help you organize and obtain the relevant documentation for you. Our digital document collection process simplifies the process, making getting pre-approved as hassle and stress free as possible.
How can you use a second mortgage?
Bridge Loan / Deposit on Home Purchase
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