A Second mortgage might be a good idea for those homeowners who are struggling to pay their debts. However, 2nd mortgage comes with high interest rates than the first mortgage, as second mortgage stands behind the first mortgage and second mortgage lenders are on higher risk. Homeowners can use second mortgage to consolidate their debts, renovate their house, for emergency funds, education, travel, and wedding, etc.
A Second mortgage is probably a good fit for those buyers who want to buy a house, but they have short down payment. If they do not have 20 % down payment, then they must purchase a Default insurance. Eventually, they can save more money if they use a second mortgage as a down payment as compared to if they purchase a PMI.
What is a Second Mortgage?
A 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. Let us say your home is valued at 500,000 dollars and your first mortgage is 250, 000 dollars. How much amount can you 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.
Types of Second Mortgage-
1. Home Equity Loan- Borrowers can simply take out the cash to pay off the debts.
2. Home Equity Line Of Credit (HELOC)-Instead of taking cash out, sometimes, borrowers prefer to make a line of credit and it is a revolving line of credit, they can borrow money, payback, and then borrow money again up to a maximum limit. HELOC is a secured line of credit against home 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 repeatedly, 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
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? Do not 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 generally 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 taking out a second mortgage to pay off debt at the best possible rates even if you have a bad credit history or unstable income.
Why choose us-
As a leading 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 amazingly 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 a professional mortgage broker in GTA. We can help you secure a mortgage with best mortgage interest rates. We are located at 2896 Slough Street, Unit # 6, and Mississauga, ON L4T 1G3. Call MB Mortgages Inc. today at 905-458-6929/416-939-7131 for your queries or you can email us at: firstname.lastname@example.org or you can visit our website at 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.