When you need money, a second mortgage may be the answer for you. The money that you get through a second mortgage can be used for various purposes like home improvement, paying off your high interest debts and purchasing additional homes. Second mortgage loans are simply another mortgage on your home, mortgage loans that are also secured against your property. Thus, if you’re a resident of Canada and you’re thinking of applying for a second mortgage loan, there are a few things that you must take into consideration.
The purpose of taking out a second mortgage loan in Canada
There are varied purposes of taking out a second mortgage loan in Canada, also known as a home equity loan. You can finance vacation properties and also use the proceeds in repaying your multiple credit card companies. Such a loan can be used for any suitable purpose according to the financial needs of the borrower. As a word of caution it is always mentioned that as the home equity loan is a serious financial undertaking, you must closely examine the necessity of taking it out.
Why would you apply for a second mortgage loan in Canada among all the loan types?
You must be wondering why you would take out a home equity loan when you need cash as there are many other kinds of loans that are available to boost your cash flow for a short term period. Well, primarily there are two reasons to take out a second mortgage loan in Canada.
1. Simple to qualify for the loan: As a second mortgage Canada loan is based on just the equity that you’ve accumulated in your home, you need not worry about your job stability or income qualification. Thus, if you’re looking for switching careers or taking a time off from your job, you may find it easier to qualify for a home equity loan than any other loan.
2. Safety of the first mortgage: Rather than touching their first mortgage, most homeowners in Canada make sure they get a second mortgage loan. The reason behind this is they can have a better rate and hence repayment becomes easier and faster. People can get out of their secured loan debt faster by taking out a home equity loan. Instead of jeopardizing your prospects by taking out a refinance loan, you can certainly tap the equity in your Canadian home.
Second mortgage rates in Canada – Are they more than your original mortgage?
If you’re considering taking out a second mortgage loan, you must be well aware of the mortgage loan rates so that you’re not being duped by the lenders into receiving the mortgage loans at a higher rate. The second mortgage loan rates in Canada are usually higher than that of the first mortgages and you can expect a rate within 10-20% including all the applicable fees.
While choosing second mortgage loans in Canada, don’t forget to choose a broker who is experienced and well-versed about the Canadian housing market. Choose a mortgage broker with experience in long term financial investments so that you can get the best advice from them while taking out a Canadian home equity loan.
