If borrowers need urgent funds against their home equity, they have options either to refinance or to get a second mortgage. If they break their mortgage in the middle of the mortgage term, then they have to go through the penalty charges. Refinance also includes legal fee, registration fee, and mortgage prepayment penalty. If borrowers want to avoid those extra costs then they have another option that is a Second Mortgage.
What is a Second Mortgage?
The Second mortgage always stands behind the first mortgage and borrowers can get it against their home equity. As they pay a first mortgage monthly payment, they must continue to pay their second mortgage payment as well. We would like to explain to the borrowers how 2nd mortgage works with a hypothetical example. Let’s say your home is valued at 500,000 dollars and your first mortgage is 250, 000 dollars. How much amount you can take out? You can get 80% of home value minus your first mortgage ($500,000*80% – $250,000= $150,000). Based on this example, you can take out $150,000 from your equity.
Advantages of 2nd Mortgage-
- Consolidate your debts
- Renovate the house
- Get funds for emergency
- Hassle free closing process (For 2nd mortgage, lenders normally do not check income and credit so it is a fast hassle free closing process).
- Keep credit scores intact ( Most of the time, approval for 2nd mortgage do not require to check Credit Bureau over and over again, which keeps credit scores intact).
Disadvantages of 2nd Mortgage-
- High interest rates
- Foreclosure(foreclosure is a legal process where mortgagees try to recover the mortgage loan to sell the property that is used as the collateral if the borrower stops to make the payment).
- Temporary financial strain
How to check your credit Score-
Borrowers can check their credit score via Equifax and Transunion. They can get the history of their credit score why they have low scores that might be due to mortgage payment arrears, credit card missing payments, or numerous different reasons. Once they get to know what their credit scores are, they have an idea of whether they can qualify from primary lenders or not.
What options borrowers have if they have low credit scores and unstable income?
If borrowers have low beacon score and their income source is also unstable, consequently,they cannot be qualified from traditional lenders. In this situation, what borrowers can do? Don’t worry, we are dedicated and experienced brokers in GTA can help you take out a second mortgage through Sub-prime and Private Lenders if you have low-income problems or a bad credit history.At MB Mortgages, we can offer you second mortgages up to 90% Loan-To-Value. We have in-house funds available for rush closings without income and credit check.
Why 2nd mortgage interest rates are higher?
The Second mortgage is registered behind the prime mortgage, based on this fact, 2nd mortgage lenders are on more risk than the first mortgage provider lenders. If mortgagors default payments then prime mortgage lenders get the loan amount first, and if something is left then it will go into the account of private lenders. To cover this risk, rates are usually higher, but it is only for a short period of time so mortgagors can pay off the high amount of debts. We are a leading mortgage brokerage in GTA and have helped many mortgagors like you to get a second mortgage at the best possible rates even if they have a bad credit history or unstable income.
Why choose us-
As a Mortgage Brokerage, we have strong relations with multiple banks and numerous lenders. We work with Canada’s leading lenders to provide you a mortgage solution that fits your budget. Our mortgage and financing process is very simple, we represent you and match you with the best suited mortgage as per your needs. This way we can guide you through this complicated process with our years of mortgage financing experience.
• We are dedicated and professional Accredited Mortgage Brokers in GTA.
• We are well trained and have experience in the mortgage financing field more than 10 years.
• We can shop around with different lenders to get you the best possible mortgage rates and conditions as well.
• We have different options for different income and credit level with access to number of private lenders to suit borrower’s needs.
We are located at 2 County Court Blvd., Suite # 438, Brampton, ON L6W 3W8. Call MB Mortgages Inc. today at 905-458-6929/416-939-7131 for your queries or you can email us at: [email protected] or you can visit our website: www.mbmortgages.ca.The information provided in this blog post is intended to provide general information. You should consult with a mortgage professional to fully determine the scope of your situation. MB Mortgages shall not be held liable from usage of the information provided on this page. Individual situation may vary.