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 lender fee of 1.5% to 2%.
Frequently asked questions
What is a second mortgage?
A second mortgage is an additional loan taken out on a property that is already mortgaged. Determination of first, second and third mortgage designation is determined by priority of registration.
What this means is if you have a first and second mortgage on your property and if for some reason you went into default – the mortgage in the first position will recoup their investment first followed by the second mortgage. It’s considered a riskier investment for the lender which is why second mortgages typically have higher interest rates than first mortgages.
How can a second mortgage help me?
Second mortgages are rapidly growing. It’s a great way for homeowners to access equity in your home without being forced to sell or pay a huge penalty when breaking your existing mortgage. Refinancing rules allow you to access up to 80% of the equity in your home.
How can I qualify for a second mortgage?
In order to qualify for a second mortgage in second position, lenders will look at four areas:
Equity. The more equity you have available, the higher your chances of qualifying for a second mortgage will be. If you are purchasing a house, a larger down payment also decreases the risk that a lender takes on.Regular payments towards utilities, telecommunications, insurance, etc, and/or confirmation letter from service provider(s).
Income. Lenders want to verify that you have a dependable source of income, to ensure that you can make payments.
Credit score. The higher your credit score, the lower your interest rates.
Property. Because other factors are risky (i.e. your credit score), lenders need to secure their investment in case you are unable to keep up with mortgage payments.
How does a second mortgage work?
The amount you can borrow will depend on the equity you have in your home. The total of a first and second mortgage can be as much as 80% of your home’s value. Consider you own a property valued at $500,000, and your first mortgage is for $325,000. In this case you’d be able to access $75,000 upon obtaining a second mortgage if approved.
How can you use a second mortgage?
Bridge Loan/ New Home Deposit
What Our Customers are Saying…
I had the pleasure of working with Manzeel at Everything Mortgages. After dealing with 2 other brokers, Manzeel made this purchase happen for me and my family. He has been professional, approachable and sincere. I couldn’t be happier and highly recommend him.
I was extremely pleased with the service I received!! The communication from start to finish could not have been any better.
I would recommend the whole team for anyone that’s looking for a mortgage!!
My experience with Everything Mortgages was excellent. My mortgage broker was very knowledgeable, professional, and personable. Also, the process was smooth and uncomplicated. I would recommend Everything Mortgages for any type of buyer, new or seasoned, residential or commercial.
Manzeel and his team at Everything Mortgages are fantastic! Buying a house can be quite an ordeal but these guys made it stress free and painless. Not only did they take the time to answer all the questions I had but they were also respectful and diligent in keeping me informed through out the closing process. They were mindful of my time and worked around my schedule. It was an excellent experience from end to end. I highly recommend them for anyone in need of a mortgage. Thanks Manzeel and team!
My experience with Everything Mortgages was excellent. Manzeel and his team are best in class. They were very professional and really simplified the process for me. I would recommend Everything Mortgages for everyone!
I’ve personally dealt with Everything Mortgages for years now and they have done many transactions for me (purchases and refinances). They are competitive, tech savvy, and trustworthy. I highly recommend them for all your mortgages needs.
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