What’s the Difference between a Second Mortgage and a HELOC?

second mortgageIf you’ve heard of home equity lines of credit, home equity loans and second mortgage, things can get confusing. Part of our role as Canada mortgage brokers is to help you figure out which is right for you. Here we’re going to explain what each does, how they work and how to make sure which option is the best for your needs. Before we get started, you’ll need to know how much equity you have available, you’ll find this on your monthly statement; subtract how much you owe from the last appraised value of your home, and you have your equity!

What is Equity?

Every monthly payment you make to the lender, you get back a little equity. It’s important to always pay more than the minimum payment to make sure that you’re getting back as much equity as possible. Once you pay off your first mortgage (and any other mortgages you may have taken out), you’ll have 100% equity! You’ll want to save up the equity in your home for a rainy day.

What is a Second Mortgage?

A second mortgage, also known as a home equity loan, is another mortgage you take out on your home based off the equity you have. So if you have a home worth $500,000 that you’ve paid off in full, you can borrow up to 80%, or $400,000 of. With a second mortgage you’ll be able to get a big lump sum to pay off your debts or to remodel your home, but it’s important to invest your money wisely. Renovations like bathrooms and kitchens pay off, so do decks, but flooring usually doesn’t pay much (but if your home is a carpeted mess it can certainly help sell it!).

What is a Home Equity Line of Credit?

HELOCs, or home equity lines of credit, are more like a credit card based on the equity of your home. Instead of having to worry about how good or bad your personal credit is, you’ll be able to borrow against your real equity that you have in your home. This can be both good and bad, because you can take a little here, a little there, over a period of time. many people open one as a sort of rainy day fund, and you’ll want to talk to one of our Toronto mortgage brokers before you do this.

Which One is Right for You?

Figuring out which one is the right one for you is never easy, but picking up the phone and giving us a call is! We’ll help you explore all of your options, understand how equity, credit and history play a roll in getting the mortgage that’s right for you. If you want a home equity loan or a second mortgage, we can help! We’ll help you find the lender that will give you the best deal – equity is hard fought, so you’ll want to make sure whoever gets their hands on it is going to give you a great deal.

Visit our 2nd mortage page to learn more!

Take Advantage of Low Interest Rates with a Canadian Second Mortgage

second mortgageGetting a second mortgage is easier than ever, but do you need one? Here we’re going to discuss the kinds of second mortgages that are available, the benefits, how you can get one and if they’re the right choice for you. A second mortgage will give you the money you need to pay off bills or send your kids to college. Whatever you need the money for you’ll be able to get it if you play your cards right. Let’s talk Canadian second mortgages!

What Is a Second Mortgage?

A second mortgage is just like your first mortgage, but you’ll have a different kind of payment situation for these kinds of loans. You may not have to pay it back for a few years, or you could have up to 25 years to start paying it back. It all depends on how much and from whom you get your second mortgage. Before you settle on any lender, you’ll want to talk with one of our Toronto mortgage brokers (or a broker in your area) to see if this is the right financing option for you.

Is a Mortgage Broker the Right Option for You?

A Toronto mortgage broker like us can help you get a second mortgage that fits with your finances and your needs; there’s literally no situation where we couldn’t help you do that. We have the relationships with the local lenders and we can also go outside of Toronto to help you find the right financing. Instead of worrying that just one lender may or may not give you the mortgage you need to refinance your home, you’ll be able to pick from a spectrum of different lenders who are willing to give you a fair and equitable deal.

We won’t just stop at how much you’re getting either. We’ll also talk to different lenders and see who will give you the best interest rate down to the percentage point. We’ll find the one who will give you the best terms possible. When working with a Toronto mortgage broker it’s important to make sure that they’re experienced and working in your best interests. We’ll do that! We have the experience to get you the best second mortgage regardless of your credit situation.

Is a Second Mortgage Right for You?

If you want to free up some of the equity that you have in your home, a second mortgage needs to seriously be considered! They can give you the money you need to pay off big purchases, big debts and everything else that you need money for. You’ll want to be careful with it, invest your second mortgage wisely. No matter what anyone says you could be gambling with your future if you go about it the wrong way. If you want a great second mortgage, make sure you speak with one of our Toronto mortgage brokers. You can get a great loan, let us help you learn how!

you talk to a mortgage broker. When you know what your options are you’ll be able to make an informed decision.

 

What Makes a Home Equity Loan Different from a Second Mortgage?

While the idea behind the two is the same, there are some differences between the two that you need to understand. First a second mortgage is generally based on your credit score, while a home equity loan is based on the equity of your home. If you fail to pay back a second mortgage you will suffer damage to your credit, but you may be able to avoid foreclosure. Depending on how a home equity loan is structured you may lose your house if you fail to repay. While a home equity loan sounds severe with the right lender you’ll be able to get the money you need and repayment terms you can live with.

How does a Home Equity Loan Work?

Home equity loans use the equity in your home as collateral for the loan. Your credit can be less than perfect and you can still get a decent interest rate, unlike a conventional second mortgage. Equity is the true value of your home. If you have a home worth $500,000, you have a mortgage that is $100,000 your equity would be $400,000. You can borrow up to 70% of your equity (so you can maintain a controlling interest in your home) for a variety of purposes.

What Can Home Equity Loans be Used For?

You can use them for virtually anything you like, but spending the money wisely is the most important part of getting a loan. Many people will reinvest the money right back into their home so they can bring up the value (and the equity!) of the house. Others will spend it on retirement and enjoy their golden years, while others will send their children or themselves to university to get a better job. The good thing about a home equity loan is you only have to pay interest on the money you borrow; you don’t have to borrow the entire available amount and you can even use it to repair your credit.

Be Careful About Home Equity Loans

When getting a home equity loan you need to be careful. You’ll want to go to a mortgage broker to find a good rate and see different competing offers from various lenders. When you choose us as your mortgage broker we’ll be able to find you an exact match for your needs for your home equity loan; walking you through the paperwork and the terms of the loan you’ll go into things eyes wide open and will be able to avoid sticker shock before you get to the negotiating table.

Home equity loans aren’t right for everyone. If you’re not sure what option is right for you, we can help you evaluate your finances; you may qualify for a second mortgage or private loan (bad credit isn’t always bad credit!). Many factors like credit, how much equity you have available and if you’ve borrowed against your home in the recent past will affect how much you can get for your home equity loan.

Contact us today and see what we can do for you.

Is a Second Mortgage Right for You?

Sometimes you need to refinance your first loan, sometimes you need to get a second mortgage. It can be hard to tell when which is right for you, and that’s when you need a Toronto mortgage broker to help you out. You can find mortgage brokers all across Canada who can help you with your options. Here we’re going to talk about the benefits of a second mortgage and how you can get the one that’s right for you. A second mortgage is just like your first mortgage, and the process is very similar!

What is a Second Mortgage?

Second mortgages are just like your first mortgage; you’ll be taking out another mortgage on top of your existing one and you’ll have it deferred usually for a set amount of time. You’ll wind up paying a little more in interest on your second mortgage, no matter how good or bad your credit is.

What Are the Benefits of a Second Mortgage?

Understanding the benefits of a second mortgage is all about understanding what you need before you start shopping for one. Do you just need a short term loan that you can pay off quickly? You may want to sign up for an adjustable rate mortgage so you don’t end up stuck in a long contract with the lender. Do you want to repair your home and pay off bills? You may want a fixed rate mortgage. Fixed rate mortgages allow people to borrow and pay back over a longer period of time, instead of trying to pay it all off in a two year period.

How do You Get a Second Mortgage?

Getting a second mortgage can be as easy as going into a bank. But if you want to get the best mortgage you’re going to want to consider getting a mortgage broker. Just like an insurance broker, a Toronto mortgage broker will help you compare rates from different lenders and see which one is the best match for you. Not all lenders are created equal, and depending on your own unique situation you may get better results doing things differently. Some people with poor credit get mortgages with private mortgage lenders while people with good credit may want to go the bank route. Either way, you want to make sure you’re getting the best rate on your next mortgage.

Interest Counts

When you sign on for a second mortgage you could be stuck with that interest rate for 30 years. While interest rates now are fantastic (5%), depending on how your mortgage application is filled out you may have to pay much more. With a mortgage broker you’ll be able to get the financing you need without having to haggle with the banks. Instead of dreading one lender rejecting you and dashing all your hopes and dreams, you’ll be able to work with a myriad of lenders who want your business. When lenders compete you come out on top!

Visit our second mortgage page today, to learn more about how we can help you: http://www.homebasemortgages.ca/second-mortgage/

Why Are Second Mortgages so Expensive?

When you’re trying to make the most of your money and your equity, you’ll probably start looking at second mortgages – but why are they so expensive?! Here we’re going to talk about how you can work with a Toronto mortgage broker (us!) and know what kind of deal you can really get. If you’re having to take out a second mortgage that runs alongside your first mortgage, it’s easy to understand why a lender might be weary of lending you more money – if you can’t handle your first mortgage how do they know they’re going to get paid again?

What is a Second Mortgage?

If you’ve taken on a first mortgage, you’ve been paying off your mortgage each month. Every payment brings you more and more equity that you can borrow against later, which is what a second mortgage does. It allows you to tap into the piggy bank that is your home and pay off debts, send your kids to school, whatever you want as long as it’s a wise investment. Working with us as your Canada mortgage broker to help you save the most on your second mortgage, so don’t do it on your own!

Why do They Cost More Than a First Mortgage?

They cost more because it’s a gamble for you and a gamble for the lender. It’s a gamble for you because you could lose equity in your home and a gamble for them because you may not be able to repay what you owe. They recoup this loss by charging you a higher interest rate, hoping that one day you’ll be able to pay off the debt in full – but not too quickly of course! This is why they cost more, and why you need to be careful about who you borrow from.

What Can You DO with a Second Mortgage?

You can do just about anything, as long as it’s going to bring you something in return. Investing in a business, your retirement or even education and the value of your home are always great choices. The last thing you want to do is get a second mortgage to go on vacation or to buy a luxury car… don’t gamble with the equity in your home! You only get one shot to make everything go right and if you’re not careful it’s not hard to end upside down on your mortgage, hoping that you can find a way to fix it.

Is it Right for You?

You’re going to want at least 1/3rd of your home paid off before you even think about taking out a second mortgage. If you don’t, there is always the risk you could end upside down on your home drained of equity. Speak with a Canada mortgage broker like us, make sure you’re getting the right financing option and the right lender to service your mortgage. Don’t ever take what’s offered to you, always get the best deal.

To find out how we can help you find a great mortgage, apply online here!

Beware the Zero Down Financing Trap with Second Mortgages

We see a lot of different tricks by lenders, but one of the worst is the zero down financing trap. They’ll offer you a second mortgage with an interest rate of up to 30%, but you won’t have to pay any money down. Oh no, none at all – but the higher the interest and the longer you don’t put any money down the more money you’re going to owe. The payments might start low, but the shock will come much later with a balloon payment. When you choose to work with us as your Toronto mortgage broker you’re going to get all the help you need to survive the mortgage game.

Why Zero Down is Bad

Zero down sounds fantastic in theory – I mean who doesn’t want to get something for nothing? But when it comes down to it, if you’re not putting money down you’re putting equity down as collateral. This is the last thing you want to do, you want to be able to get a fair loan and fair terms for the LIFE of the loan, not just the beginning. This is exactly why you want to choose us as your Canada mortgage broker. We’ll be able to help you know when a deal is too good to pass up and when it’s time to let a bad one pass you by.

It’s Cheap in the Beginning

Many second mortgages will be really cheap in the beginning, which is great. You can pay as you go and you aren’t too worried about it. You keep paying down your debts, putting more and more of the money that probably should go towards your second mortgage or home equity loan towards other bills and expenses. The bill is low, why worry right? Wrong. Each minimum monthly payment you make goes more and more towards interest, not the original amount you borrowed. You end up on a debt treadmill to nowhere.

Then It Costs More

Even if you’ve been keeping up with the payments on your home equity loan or second mortgage, if it’s structured all wrong. Working with one of our Canada mortgage brokers is the best way to avoid this kind of problem. We’ll be able to help you get the most for your money. You don’t want to end up with one that puts you underwater, robbing you of your home and your savings.

Avoid Sky High Interest Rates

Sky high interest rates are one of those things that put you under. You want to get it as low as possible – with interest rates at near all-time lows you can find rates as low as 3% depending on your kind of financing. There are variable rate second mortgages, fixed rate, combination and more – what’s important is that you’re getting the one that’s right for you. Contact us and see what the best Toronto mortgage brokers in the business can do for you.

How to Deal with an Underwater Mortgage

bridge mortgagesIt goes by many names: underwater, upside down, sideways – whatever you call it it’s no good. When you owe more than the property is worth you may have to walk away, but there is always another option. A second mortgage can help pull you out of the debt bubble and help save your home from foreclosure, but you’ll need to be very careful about how you proceed. Here we’re going to go over a few things that you can do; from refinancing to staying and paying until the troubles are over, there is always a way to save your home.

Refinancing with Second Mortgages and Modifications

Refinancing with a second mortgage is almost always an option, but if you just can’t do it you can always look at loan modifications. These can be tricky and you might need a lawyer to get the job done right, but you’ll be able to see if you at least have the chance to work with your lender to save your home.

Staying and Paying Your Mortgage

You’d be surprised at how much a lender wants you to stay in your home and keep paying your mortgage down. IF you walk they have to pay the property taxes, maintenance, and then they have to hope that they can find someone to take this “distressed” property off their hands. The more they can get you to stay in your home the better.

Walking on Your Home

You can always walk, but it’s important to say that if you’re underwater walking away from your home may not cover everything you owe. You could still be liable for any negative equity that remains, or however much you owe minus the sale price of the home. This is why it’s just so so so important to make sure that you don’t let your home get to this point. Refinancing can help you at least mitigate how much you owe to the point where when you DO walk on your property you won’t have to pay the excess.

Go Bankrupt

You could always declare bankruptcy in a last ditch attempt to save your home. It won’t completely wipe out your mortgage debt, but it can wipe out some of your other debts and give you the time and resources to pay off what you owe. You could catch up on a few years of payments and save on interest, but it will all depend on how your mortgage and bankruptcy are structured.

You’ll still have to keep paying on your mortgage, but you’ll want to talk to your lawyer. Don’t wait until it’s too late, talk to someone now and find out what the best avenue is to take for your case.

There are many ways that you can save an underwater home – making bankruptcy and walking on your home last resort efforts. Speak with a lawyer, consider staying and trying to work things out with your lawyer.

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Rushing into a Second Mortgage Can Cost You Big

second mortgageKnow that saying “A watched pot never boils”? Second mortgages will boil over, burn down your house and gobble up your first born – well probably not the last one but you get the idea. When it comes to getting the right loan to value ratio and fair repayment terms you want to work with us as your Toronto mortgage broker. Life is hard, but why make it harder by rushing into a home equity loan? There are lenders all over Canada competing right now for your business, take your time and let us help you find the one that’s right for you.

What is a Second Mortgage?

For the uninitiated, a second mortgage is just another name for a home equity loan. It could actually be the fifth mortgage on your home, but it’s any type of equity loan on a home that comes after the initial one made to purchase the property. You’re going to need to make sure that you have a significant portion of your home paid off before you start applying for a home equity loan or home equity line of credit – usually 50% or more is a good place to be in.

Why Would I Want One?

Why would you want a second mortgage? Well according to our dandy Canadian mortgage brokers you’re able to get money out of your home when you need it without selling it. So if you want to retire but don’t want to end up in a retirement village, you want to remodel, buy a car, send the kids to university or do a myriad of other things you can. While it sounds ideal in theory, a lot of things can go wrong and the last thing you want to do is rush in when you’re not ready.

What is a Loan to Value Ratio?

When you take out a home equity loan like a second mortgage you might think you’re getting dollar for dollar out of your home. Nope, that’s not how it works. You’re actually getting a LtV or loan to value ratio. You can get them up to 80% on a home equity line of credit if you have an excellent credit history and a high equity share in your home, but for most people it hovers around 60%. When you work with our Toronto mortgage brokers we’ll help you get as close to 100% as possible. The higher your LtV is the less you’ll have to borrow against your home.

Is it Right for Me?

It could be, but you’ll want to talk to one of our Canada mortgage brokers to be sure! We’ll be able to look over your equity situation, your credit and the laundry list of other things that go hand in hand to make a second mortgage a good choice for homeowners. Only fools rush in, make sure that you know all the facts before you sign on the dotted line for your second mortgage.