Second Mortgage in Toronto
If you are in a financial bind, taking out a second mortgage on your home can help you meet your financial responsibilities without having to sell your property.
To find out more about getting a second mortgage or whether it’s a good option for you, get in touch with eMortgage Solutions today. Book a consultation at (416) 258-0156.
How Does a Second Mortgage Work?
A second mortgage is a loan that you can take out on your home, in addition to your primary mortgage. The second mortgage is paid alongside your primary mortgage and must be repaid within 1-2 years.
How Much Can You Borrow on a Second Mortgage?
The amount you can borrow for your second mortgage depends on the value of your home, but it can be as high as 80% of the property’s total equity.
To determine the approximate rate of your second mortgage, you will need a home appraisal. The value of your home minus the balance owed on your primary mortgage will amount in your equity.
Is a Second Home Mortgage a Good Idea?
Many people choose to take out a second mortgage to pay for medical expenses or other financial emergencies. Others will use the money to re-invest in their home, in the form of home improvements or renovations. While taking out a second mortgage can give you more immediate financial freedom, it is also a significant responsibility that is, by no means, risk-free.
Second Mortgage Interest Rates
It is important to understand that the interest rates for a second mortgage are usually a lot higher than that of your primary mortgage––this has to do with risk. When you invest in a second mortgage, you must borrow from a different lender than that of your primary mortgage. In the case that you cannot pay off either mortgage, your home will experience foreclosure, and the sale of the house will pay off the primary mortgage before the second. Therefore, the second lender is taking on more risk than the first, thus increasing the interest rate.
It is essential to take these risks into account when considering a second mortgage. The brokers at eMortgage Solutions are more than happy to help you weigh the pros and cons.
What Is the Difference Between a Home Equity Loan and a Second Mortgage?
The main difference between a home equity loan and a second mortgage is accessibility. While a home equity loan offers you many of the same services and benefits of a second mortgage, you are granted an extended period to pay it off with a lower interest rate. When applying for a home equity loan, you must prove that you have good credit and a steady income. A second mortgage, on the other hand, is much easier to qualify for but is riskier in that it must be paid off sooner, and at a higher interest rate.
Find the Best Second Mortgage Rates with eMortgage Solutions
If you’re interested in finding out more about second mortgages, trust the advice of Toronto’s best mortgage specialists. We will do what we can to find you the very best rates.
Set up an appointment to get started today!