A second mortgage is just that: additional money borrowed against an already mortgaged property. Most lending institutions view a second mortgage as a riskier proposition than the first mortgage for the obvious reason that it increases the homeowner’s debt load. In addition should something happen and the homeowner default the lender who provided the primary mortgage would be in position to take possession of the home, with the holder of the second mortgage essentially being frozen out. Because of this anyone contemplating a second mortgage needs to be aware that higher interest rates intended to protect the lender will be in play and that if your credit is less than stellar you may need to pursue alternative financing for the second mortgage.
Why do People Need Second Mortgages in Toronto?
There are a number of reasons homeowners approach RMAI/Loancentral.ca to secure second mortgages in Toronto with the most common reason being debt consolidation. Homeowners often find that by consolidating all their unsecured debt into a single monthly payment they can save big on interest payments and services charges. But whatever the reason for wanting a second mortgage the borrower will typically need to satisfy a few basic criteria before being approved.
- Income – The borrower will need to demonstrate a reliable source of income.
- Equity – Equity is an important factor when it comes to securing a second mortgage. In a nutshell the more equity you have the greater your chances of securing a second mortgage.
- Credit score – If your credit score is good you stand a good chance of being approved and getting an attractive interest rate. If your credit score is bad your chances of approval will suffer and you’ll be facing higher interest rates as well.
Of course if you have other assets besides your mortgaged home that you can put up as collateral that will greatly enhance your chances of being approved for a second mortgage.
Before applying for a second mortgage make sure your reasoning is sound. A second mortgage can be the right thing to do to consolidate debt or pay off a substantial medical bill or help fund your child’s higher education. But it’s ill-advised if you only want the money to fund a vanity purchase.
If you’re certain you are properly motivated have your home appraised. The pros at RMAI/Loancentral.ca can help you with this step. The appraisal will determine the market value of your home which will be used to determine your suitability for a second mortgage and how much you’ll be able to borrow should it be determined you are a good candidate. Once these things have been established we’ll scour our network of lenders to find the best second mortgage options for your particular situation.
Securing second mortgages in Toronto doesn’t have to be a nerve-wracking or drawn out experience if you take advantage of the knowledge and experience of the team at RMAI/Loancentral.ca . Give us a call to find out more.