Are you thinking of paying off some of your debt, or need
some money for major renovations or other financial needs? Are you asking
yourself “should I refinance?” Well a second mortgage might be the best option
for you.
Firstly, what is a second mortgage? A second mortgage, also known
as a second mortgage loan, is a home equity loan that lets you borrow from your
home’s equity while avoiding refinancing your first mortgage. This is important
because a second mortgage lets you continue payments on your existing mortgage
uninterrupted, allowing you to pay off your debt quicker, ultimately saving you
interest.
Because a second mortgage is based on your home equity, the
amount is based on the difference between the appraised value of your home and
the amount still owing on your first mortgage. This can be a significant amount
of money, and refinancing by taking out a second mortgage can be a good option
for getting some much needed capital.
So what are the benefits of a second mortgage? Often, second
mortgages can be important sources of income, and a lot of income. Because it
is based on the value of your home, it is easy to access thousands of
dollars. An easy way to estimate the
amount you might qualify for is to have an appraisal done on your home – which
will be necessary once you apply. What can they be used for? Really anything. Paying off debt is one of the most common usages of a second mortgage loan. Because the interest rate on a second mortgage loan is often far lower than a credit card, paying one off with the other can ultimately save you thousands of dollars in interest.
Using a second mortgage to pay for a child’s tuition is also common. Chances are you have built up substantial equity in your home by the time your child goes off to college or university, and so a second mortgage can prove to be a sure-fire way to secure funding for this. For the same reason, obtaining a second mortgage loan to pay for home improvements or to open a small business is an important consideration when asking “should I refinance.”
Why not just refinance by adjusting your first mortgage? This can be an option, but often the interruption can mean a longer amortization period resulting in more interest being paid by you in the long run. This is where a mortgage broker comes in. Let them go through all of the options available to secure the best mortgage product to suit your current financial needs and goals.
As a homeowner, you have worked hard to make a dent in your existing mortgage and have thus created equity. This home equity can be an important source of income when it comes to a second mortgage loan.
For more information about what your answer to the question “should I refinance” might be, and what a second mortgage is, please contact Paul Mangion at 416-204-0156 or visit www.themortgagecentretoronto.com
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