Know 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.