Many homeowners are not aware of the fact that they can get a second mortgage on their home on top of their first mortgage. In this article I’ll go over the second mortgage process and why it may be the right fit for you.
What is a second mortgage?
When you already have a mortgage on your home, it’s possible to receive a second, additional mortgage on top of the first. The first mortgage is called your primary mortgage and having a second mortgage on the same home while the primary is still not paid off is called a second mortgage.
A second mortgage is done through private lenders and some B lenders.
What’s the benefit of a second mortgage?
There are many benefits of having a second mortgage on your property. It’s useful if you’re in need of quick funds for an emergency, an investment, school tuition for a child, home renovations or to even pay off high interest consumer debt.
When you get a second mortgage, you will be using the money from an asset (your home) to increase the value of that asset itself. Those with mounting credit card debt can also take out a second mortgage for debt consolidation purposes to make repayments more affordable and manageable.
How does a second mortgage work?
A mortgage is always taken out against the equity of a home, which means a second mortgage is just the same. The loan amount for the second mortgage will depend on the equity built up in your home. You can borrow up to 80% of the appraised value of your home, minus the balance on your first mortgage.
When you work with me, I will be in contact with different lenders to see what loan options are available to you and at what interest rate.
What’s the interest rate for a second mortgage?
The interest rate on a second mortgage will be higher than on the first one. This is because when you go with a private or B lender, they have higher interest rates compared to A lenders. Additionally, a second mortgage is a higher risk, so lenders are more cautious with lending that money.
When you work with me I can help you secure the best possible rate for your situation. I have access to many B lenders and private lenders and can compare what interest rates are available and get the best possible rate for you.
Start the process today.
The process to get a second mortgage on your home will be similar to your primary mortgage process. You will need to apply through my website, send me the needed documents that I require and we’ll go from there. Note that in many instances for these types of mortgages, there will be less documents needed and could be as little as just an appraisal needed. I can either meet in person in Kelowna or do the full process remotely over the phone.
If you’re interested in learning more about a second mortgage and if it’s right for what you’re looking for, give me a shout today. I am happy to discuss your situation and available options for you. Call me at 250-826-311 or contact me through my contact page.