780-466-9898
Dominion Lending Centres’ Mortgage Force is a trusted name when it comes to securing second mortgages in Edmonton. Our team of experts helps to cut down our customers’ monthly mortgage payments on second mortgages. Don’t pay minimum payments on credit card bills, car loans, and other unsecured debt when you’re only paying off the interest at a high rate.
A second mortgage is a type of mortgage that allows you to use your home’s equity as the collateral. You can often borrow a much larger amount than you usually would be able to if the loan was unsecured. This is very similar to the original loan you got in order to purchase the home, but there is a slight difference.
When you buy your home, there is typically a mortgage charge placed against the title. This means that if a borrower defaults on the mortgage loan, the home can be repossessed by the mortgage lender. Technically, although you treat your home like your own (unlike renting), the mortgage lender has the legal right to repossess it if the borrower stops making payments.
A second mortgage goes in behind the first mortgage on title. You will have two mortgages registered against one property. This is usually done when refinancing the existing mortgage is not an option, you won’t qualify, or if it doesn’t make sense to do so. This can be a great way to take equity out of your home without disturbing the first mortgage. This equity can be used for investment purposes, pay tax arrears, do renovations or to consolidate high-interest debt
Most homeowners in Edmonton who get second mortgages do so because they need funds in a timely manner. Their home is the most valuable asset they have to use as collateral. This may mean that you need to make a very large home repair or upgrade. It may mean that you want to send a child to college. It may mean that you want to buy another property to rent out. Whatever the case may be, a second mortgage can be used as a way to get a large amount on a loan.
Second mortgages are typically awarded as either a single lump sum (useful for making one large purchase, like upgrading your home to solar power) or a line of credit (useful for paying something in installments, such as yearly tuition fees). With the second option, we can set up a line of credit which will allow you to borrow funds as required.
Second mortgages are loans against the equity in your home that sit behind the existing mortgage on the title of your home. Dominion Lending Centre’s Mortgage Force offers clients advice for solutions on second mortgages in Edmonton and the neighboring areas for; debt consolidation, investing in a small business, and post-secondary education for your children, as well as the unexpected costs that come up from time to time.
The amount available to homeowners for second mortgages depends on the equity they have in their house. Home equity is the value of your home minus all the debts you have against your home. If you want to calculate the equity in your home, look at the following example:
Let’s assume your home is valued at $450,000. Our mortgage team can help provide you financing of up to 80% of this value in this case, that’s up to $360,000. Let’s assume you’ve borrowed $300,000 against this already. This leaves you with the option of securing a second mortgage of up to $60,000!
Now that you know what a second mortgage is and the options available to you, let’s look at the pros and cons of doing so.
Lower Interest Rates
By consolidating your debts with a second mortgage, you have an opportunity to pay less in interest. However, it’s important to remember that MORTGAGE RATES FLUCTUATE and what is low now may not stay that way in the future.
Unless you choose a fixed-rate mortgage, plan to pay higher interest rates in the long term.
Overall, using your home as collateral for a second mortgage is less risky to lenders so you will receive a lower interest rate than if you went with an unsecured loan.
While this is advantageous when it comes to paying off credit card debt, keep in mind that you won’t save on interest if you run up the balances of your cards again.
Flexible Payment Plans
In most cases, you will be able to extend the amortization period (the length of time you have to pay the loan back) on your second mortgage. This is a huge advantage as you can tailor your payments to suit your income and budget.
Loan Amount
Second mortgages allow you to borrow a large amount of money that you may not otherwise be able to access without using your home as collateral.
How much you can borrow depends on the lender, but it’s possible to borrow up to 85% of your home’s value.
There Are Conditions
In order to be eligible for a second mortgage, you need to have enough equity in your home to cover the entirety of the debts you want to pay off.
Your credit score, employment history, and debt-to-income ratio are all taken into consideration when setting your interest rate on the second mortgage. If your credit isn’t great or you have a high amount of debt compared to your income, you will end up paying a higher interest rate.
Risk of Foreclosure
When you take out a second mortgage, you are basically transforming your unsecured debt into a secured debt. This means that the bank is entitled to take your house if you don’t make your payments.
This is why taking out a second mortgage requires a certain degree of care and self-control. Tapping into your Home’s Equity to pay off your debt may lead to racking up more debt, especially if you are not careful or your income changes.
When the bank repossesses a home, it’s referred to as “foreclosure” and can negatively impact your credit rating for a long time
In order to qualify for a second mortgage, lenders will look at four areas: Equity, Income, Credit Score, and Property.
There are many borrowing options available to help you with your financial needs. If a second mortgage sounds like the way to go. Our knowledgeable and professional lending specialists are here to work for you and get the right mortgage product to suit your unique and individual needs.
Call for a FREE quote 780-466-9898
Call Now
I have worked with Jody & Sunny over the last 4 years on various residential real estate files.They are a great team of professionals who believe in educating their clients throughout the entire home buying process from start to finish. I highly recommend the Mortgage Force Team for anyone looking for their next mortgage.
I love dealing with the mortgage force team! They are informative, answer any questions I have and guide myself and my clients through the process. They make things so easy!
Being a single mom with rent, groceries, and all the living expenses to cover, I was not able to save up any down payment. Jody was actually able to put me in a program which allowed me to borrow my down payment from the line of credit I had. Thanks to her, I took possession my new condo on Nov 11, 2015
I wanted to thank them for getting us in the home of our dreams. Its rare these days to experience such quality of genuine care and service. Thank you
Jody and her team were a great help in finding the best mortgage for us. really appreciate the work they do for the client
