Second Mortgage

Second Mortgages

Many people consider their mortgage the biggest financial commitment, which they will likely have in their lifetime. However, a second mortgage can be ideal for homeowners struggling to service debts, as well as those who for whatever reason need access to their home's equity.


What Is A Second Mortgage?

Many people don't understand how a second mortgage actually works. A second mortgage is always subordinate to the first mortgage on a property, meaning that if the loan goes into default the first mortgage will get paid off first before any proceeds go towards paying the second. Furthermore a second mortgage is a separate charge on title. This being the case, a second mortgage is much riskier from the perspective of many lenders, and as such, most second mortgage solutions are offered by private lenders and investors.


The Benefits Of Using A Second Mortgage

What is more, a second mortgage isn't just a way to gain access to your home's equity or consolidate high interest debt. Rather, second mortgages often present favourable alternatives to overall refinancing. How? Because the interest on second mortgages, (if the mortgage itself is used to gain access to equity so that you can invest in business or added real estate) can be tax deductible. Likewise, a second mortgage is definitely something to consider if you want to refinance but are deterred by penalties involved with breaking your original mortgage contract.


What Are The Associated Fees?

When you apply for a second mortgage you can expect to be looking at interest rates between 8 and 14% and in some cases even higher if the borrower is much riskier! There are also associated lender and broker fees as well as legal fees for both sides of the deal (borrower and lender), which are incurred by the borrower.

Here is a summary of costs you can expect to incur as the borrower:

  • Home appraisal fee
  • Legal fees – for both the private lender and you the borrower
  • Title search
  • Title insurance
  • Lender Fees
  • Mortgage Broker Fee

Having a mortgage professional like me on your side is therefore essential in finding and securing not just a second mortgage deal with the most favorable rate of interest, but one where the associated costs have been carefully compared against those of other lenders.


Next Steps:

Thinking of trying to secure a second mortgage? Call or drop me a message today and let's start discussing how to secure you not just the best rate, but also the best long term solution to whatever you might need it for.