Things are still changing quite fast these days economically speaking and you may be in a financial situation wherein you need fast access to cash but not sure where to get the funds. The good news is that if you’re a homeowner, it is possible to use your home equity to borrow money and get cash faster than other financing options with the help of a private second mortgage.
What Is A Private Second Mortgage?
A private second mortgage is simply a second mortgage that is obtained from a private lender. To make things simple, if you borrow money using the home equity you have built up in your home that you are still currently paying for via your primary mortgage, that loan approved for that is called a second mortgage. A second mortgage is called as such because the homeowner has an existing first mortgage on the home, hence the next loan is called a ‘second’ mortgage. When a second mortgage is funded by a private lender, then it is called a private second mortgage.
Why Get A Second Mortgage from A Private Lender?
The traditional model of borrowing money is borrowing from banks. Unfortunately, banks tend to have very strict rules and their requirements are often quite challenging to qualify for especially for people who have bad credit, are self-employed, are retired, or have other debts. Private lenders typically have friendlier terms and operate on a much smaller scale so they tend to approve loans faster and can be more lenient when evaluating a borrower’s requirements. Oftentimes, private lenders just look at the quality of the borrower’s home equity and/or property value and do not require having stable employment or a high credit score.
In addition, private lenders are not regulated by the Bank of Canada and thus, they are able to set their own rates, qualification standards, and approval procedures. They usually work with their trusted mortgage brokers to help provide win-win borrowing options for those who might need extra cash fast. With this said, know that a private second mortgage is still a loan and thus, is a financial obligation that has to be paid back in the future more so that it takes one’s home as collateral. Defaulting on a private second mortgage can result in losing one’s home so it pays to be a responsible borrower and be sure to review loan terms before signing anything.
Get A Private Second Mortgage in Canada Fast
To qualify for a private second mortgage in Canada, the lender has to meet certain criteria that usually revolve around the value of the home equity that the homeowner currently has and how much they want to borrow. Secondary considerations include one’s credit score, source of income, and other qualifications that the lender may set. Note that just because you do not qualify for a certain lender does not mean that there will be no one interested to lend to you. It is a matter of finding the right private lender with the right terms too with the help of professional mortgage brokers.