Many people would like to know more about getting a second mortgage in Canada. First let’s look at exactly what a second mortgage Canada loan is and how it works. A house or a piece of property can have a number of mortgages placed on it by lenders, the first mortgage holder has first claim to any proceeds on the sale of the property, the second mortgage holder then can be paid off once the first mortgage holder is paid off, if there is a third mortgage then that lender must wait until the first and second mortgages are paid off before they can get paid.
This also means that the first mortgage holder has a higher level of security than the second mortgage holder and the third mortgage holder has the least amount of security. The lower level of security results in a higher level of risk on a Canada second mortgage rates. The higher level of risk also means that fewer lenders will be willing to place a second mortgage Canada on your property.
Fewer lenders and a higher level of risk usually results in a higher rate of interest on a second mortgage Canada and in many cases you will need a mortgage broker to assist you in placing your Canada second mortgage loan with a private lender.
A mortgage broker should arrange for an appraisal of your property, this will help determine the loan to value ratio of your home. A higher loan to value ratio will result in a higher rate of interest and once the loan to ratio value passes the 90% mark the chances of getting a second mortgage in Canada are very low.
As with all transactions regarding any property you should have a lawyer complete any paperwork related to a second mortgage Canada.
A second mortgage in Canada can be used to consolidate debt from credit cards, educational bills or personal loans. In many cases the interest rate charged on a Canada second mortgage loan will be less than what a credit card company would charge, some have interest rates as high as 29%. The Canada second mortgage interest rate will be lower because credit card debt is not secured and therefore a much higher risk form of debt, a mortgage is secured and therefore will have a lower interest rate.
To determine what type of second mortgage Canada is best for you please give us a call. Our agents can tell you mortgages best deals, there is no charge for the initial consultation and we may be able to save you a lot of money.