Second Mortgage in Ottawa
If you have pressing financial responsibilities, borrowing from your home’s equity through a second mortgage can help relieve the fiscal strain.
The team of specialists at Borrowing Made Simple has been guiding homeowners through mortgage-related decisions for years. We have access to trusted lenders throughout the Ottawa area and can help you find the very best rate for your second mortgage.
To set up a consultation, get in touch with us today at (343) 763-2019.
How Does a Second Mortgage Work?
A second mortgage is a second loan that you can take out on your home in conjunction with your first mortgage. A homeowner may choose to take out a second mortgage to fulfill pressing financial responsibilities. The first and second mortgage must be paid off in unison.
How Much Can You Borrow on a Second Mortgage?
The amount you will be able to borrow for a second mortgage is dependent on the total equity of the property but can be as much as 80%.
If you are interested in getting a second mortgage, the first step is having your home professionally appraised. Once you are aware of your property’s current market value, you will subtract the remaining balance to be paid on your first mortgage to find an approximate second mortgage amount.
What Is the Difference Between a Home Equity Loan and a Second Mortgage?
Taking out a home equity loan is very similar to taking out a second mortgage, but some significant differences are essential to outline.
Home Equity Loans
Home equity loans, like second mortgages, are an opportunity to use your home’s equity to your advantage without having to sell your home. A home equity loan, however, is more challenging to qualify for as you must prove your income and credit rating. You will also have a more extended period to pay off the loan and a lower interest rate.
Second mortgages are more beneficial for those who are struggling financially, as it is easier to qualify for financing. On the other hand, second mortgages typically need to be paid off more quickly with a much higher interest rate.
Is a Second Mortgage a Good Idea?
Getting a second mortgage can give you the freedom to address financial responsibilities and concerns right away. Many homeowners will take out a second mortgage to invest in home improvements or in the event of a medical emergency.
Second Mortgage Interest Rates and Risk
It’s important to recognize that second mortgages are risky. When you get a second mortgage, you must work with a different lender than that of your primary mortgage. In the case that you cannot meet either obligation, your home will face foreclosure, and the first mortgage lender will be paid off before the second. Therefore, the second lender is taking more of a risk and will charge higher interest rates.
It’s imperative to consider these risks when considering a second mortgage. Our brokers will be more than happy to help you get a better understanding of whether this option is right for you.
Find Your Second Home Mortgage with Borrowing Made Simple
Are you interested in finding out more about taking out a second mortgage? Set up an appointment and discuss your options with one of our experts today! Call (343) 763-2019.
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