How Can a Second Mortgage Help You?
A Second Mortgage also known as Private Mortgage, is a charge registered against the title of your home in the second position behind your first or existing mortgage. Often times our Second Mortgages are very easy and simple to qualify for, our lenders will simply confirm that you have enough equity in your home and will forgive you even if you don’t have income, good credit or positive net worth. Most of our second mortgages are approved on an equity basis.
Most of the time, our clients choose second mortgages to use the funds for the following:
- Cash Out Home Equity – If refinancing the existing mortgage is not possible or if the penalty is too high, this is the next best alternative. You can access your home equity without even re-negotiating your first mortgage.
- Debt Consolidation – Paying off high-interest credit cards and loans, while keeping the first mortgage in place.
- Home Renovations – Using the equity in your home to upgrade a kitchen, bathroom, add a new roof or finish that dream basement. Selling a home can be expensive after considering the costs involved to sell and acquire a new home, now, you can unlock the equity in your home and turn watch your dream home unfold in front of you.
- Temporary Funding – Maybe you need emergency money to help a family member, pay for unexpected expenses, or pay your CRA bill, or for your business. Our second mortgage lenders will lend you the money you need
In most major cities in BC, the maximum Loan to Value for BC Second Mortgage financing in today’s market is 75 to 80% of the appraised property value. For example if the home is worth $100,000 and the existing first mortgage balance is at 60% of the value($60,000), then the maximum equity that we would be able to access would be $15,000 to $20,000(75% to 80% of $100,000 – 60% existing mortgage balance = 15% or 20% equity or $15,000 or $20,000). Private or Second Mortgages make sense when clients do not want to lose their preferred rates on their existing mortgages, or if the prepayment penalties for the existing mortgages are too high, or if the funds are only needed for a short period or to consolidate bills etc.
Is a Second Mortgage right for you? If you are thinking about getting a second mortgage, you will need to have the following information ready:
- Estimated current value of the subject property
- Estimated current mortgage balance, rate, payment
- Original Purchase Price and Date of Purchase of the subject property
- How much funds are required
- Purpose of funds – Debt Consolidation, Renovation, Business Start-Up etc.
Once we have the above information, we can quickly determine how much equity you have in your home and how much equity you will be able to access with a Second Mortgage.