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BC Second Mortgages are secured against your property in second priority behind your first or existing mortgage.

BC Second Mortgages are usually placed by Private or Alternative Lenders and rates are generally much higher than first mortgages because of the risks associated with lender default or housing market value fluctuations.  In most situations, the higher rates and fees associated with Second Mortgages still may have some benefits to borrowers in need.

BC Second Mortgages are placed for clients in the following situations:

• Cash Out Home Equity – If refinancing the existing mortgage is not possible, this is the next alternative
• Debt Consolidation – Paying off high interest credit cards and loans, while keeping the first mortgage
• Home Renovations – Using home equity for asset enhancement
• Temporary Funding – Using the equity until the maturity date of the first mortgage to save on penalties.

In British Columbia, the maximum Loan to Value for BC Second Mortgage financing in todays market is 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 $20,000(80% of $100,000 – 60% existing mortgage balance = 20% equity 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 BC Second Mortgage right for you?  If you are thinking about getting a second mortgage, you will need to have the following information ready:

1. Estimated current value of the subject property
2. Estimated current mortgage balance, rate, payment
3. Original Purchase Price and Date of Purchase of the subject property
4. How much funds are required
5. Purpose of funds – Debt Consolidation, Renovation 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.  Remember, at LoanBox.ca – We work for YOU, not the Bank!  Our goal is to find you the best mortgage possible based on your needs.  Give us a call and we will guide you to the right mortgage solution.

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