29 May Mortgage brokers can get you approved for a second mortgage
Common Second Mortgage Questions; Getting approved!
Many people are wondering if a mortgage broker can assist them in getting a second mortgage in Toronto. The answer is yes! You will need to meet some criteria, though, and you may not qualify for the best rates. Learn more about what you need to know when speaking with your Toronto mortgage broker and qualifying for a second mortgage with this blog post.
* What qualifies for a second mortgage?
You can access the equity in your home with a second mortgage. The most important thing you will need is enough income to cover all of your monthly expenses and, if possible, some extra money left over each month after paying off debt. You may also qualify for a lower interest rate based on what you earn.
– What does a second mortgage have to be secured against?
A home equity loan, which is the collateral for your second mortgage, can only be used as debt on one property. The bank makes sure that you will not default by qualifying you with income and credit history information first before approving it.
– How much can I borrow?
A second mortgage usually comes with a fixed monthly payment. This means that the total amount you are borrowing is based on your income and expenses, which will help determine how much you can afford to pay each month without defaulting.
-What do I need for a second mortgage application?
You’ll need: your Notice of Assessment forms, pay stubs and bank statements.
– Will my credit rating be affected?
It’s possible for a second mortgage to negatively affect your credit score but if you are well qualified it is unlikely.
– What interest rates do lenders offer on second mortgages in Toronto?
Lenders will usually not give the same rate as their standard mortgage, as there exists greater risk with the second mortgage position. Always speak with your mortgage broker about the best rates available in your given circumstance.
– What is the difference between a second and third mortgage?
A second mortgage is usually used to buy land, renovate or consolidate debts or for pretty much anything you may need the funds for. A third mortgage on the other hand is a loan registered in 3rd position on the property that generally has a higher interest rate.
It is best to have a mortgage broker negotiate your second mortgage contract
– How do I get started applying for my second mortgage?
Start by speaking to a mortgage broker who will review your financial situation and recommend the best course of action for you.
– What are my second mortgage options?
You have many different loan types from which you can choose, but they all function in basically the same way.
A second mortgage is an excellent option if you want more money with more flexibility and a lower monthly payment and the ability to consolidate high interest debt. This will allow for your credit facilities to get a break and show that you have lower credit utilization and potentially affect your credit score going forward.
– How do I get started applying for a second mortgage in Toronto?
Contact a broker and they will take over the process for you. In many cases you can be approved with no proof of income or any reliance on your credit rating. Pre-paid mortgage options are also available, where the entirety of your monthly payment can be deducted from the proceeds. This can be helpful in the short-term, however, not to be relied on for a long-term plan. Always have an exit strategy and ensure to have this discussion with your mortgage broker to be certain you will come out ahead when all is said and done.
In our next blog, learn more on mortgage broker tips in Toronto, Ontario