Buying a house is arguably one of the biggest purchases that most people will make throughout a lifetime. Owning a home is a long-held dream held by many Ontarians. Homeownership forms the basis of the building blocks that are considered central to many of us along with career advancement and growing a family.
Of course very few of us can buy a house outright without the help of a mortgage loan to cover the cost of the home. This First Mortgage or Primary Mortgage loan represents a long- term loan that is leveraged against the house and is designed to be paid off over a lengthy period. Most Prime Mortgages terms are 20 to 30 years. The borrower is expected to pay back the principal of the loan in addition to any accruing interest for the duration of the loan.
This primary loan or first mortgage is the property’s principal mortgage. Regardless of other mortgage loans taken out at a later date, the primary loan is always paid first. The First Mortgage represents the original cost of the house itself, minus the down payment that was put towards the initial purchase of the home.
As this principal loan is paid off over time, equity is slowly built up in the property. Equity can eventually be accessed for differing needs. If finances become strained or perhaps unexpected expenses surface, this equity can be tapped into. If a borrower chooses to use this equity for immediate financial needs, he/she can opt to take a Second Mortgage on the existing property.
In simple terms, a second mortgage is a loan secured by the property in addition to the primary loan. A second mortgage is, in other words, a loan leveraged against a property that already has an existing mortgage loan. The second mortgage is considered a subordinate loan in that it is always paid off after the balance of the first mortgage is paid.
Payments toward the second mortgage are delayed until the principal loan is paid in full. As a result, second mortgages are deemed inherently riskier for lenders. In the rare case of default of the first mortgage, the primary loan is paid out first to the original lender making it harder for lenders of secondary mortgages to recoup their losses in the power of sale of the property.
Effectively, this means that a borrower can hold two mortgages at the same time on the same property. The second mortgage secured by the property could be in the form of a commonly used Home Equity Line of Credit (HELOC) or the secondary mortgage may take the form of a general refinancing of the property if payments become difficult for the borrower.
If a bank is unable to finance a second mortgage due to credit or employment issues, Ontario has a vast network of private lenders that can help borrowers access the equity in their home with a second mortgage. Private lenders will rely on the appraised value of the property and calculate its Loan to Value (LTV). A private lender will generally not loan a second mortgage over 75% LTV (or 75% of the appraised value of the property.)
Any homeowner can take out a second mortgage as long as the LTV does not exceed 75% and there must be at least 25% equity built up in the property. Mortgage Broker Store can help you access private lenders in Ontario to apply for a second mortgage.
What Are the Typical Uses of a Second Mortgage?
The decision to take out a second mortgage is not a light one to make. This loan represents a second loan on a property and payments need to continue to be made on the first mortgage. Borrowers have differing needs and different financial circumstances. Generally, the reasons for taking out a second mortgage include:
- Consolidate Debt- If multiple debts require payments, it is sometimes advisable to take out a loan, using the equity in a property to consolidate these loans into one more manageable monthly payment.
- Refinance a Mortgage– If the first mortgage is increasingly difficult to pay due to unforeseen financial circumstances, a second mortgage on the property can help to finance the property and cover the monthly payments.
- Access to Lower Interest Rates- If interest rates have lowered substantially since taking out the principal mortgages, a second mortgage is a way to take advantage of these lower interest rates to pay for immediate financial needs.
- Renovation Cost- Renovating a property is one very good way to increase its resale value and the property price will likely appreciate as a result. Taking out a second mortgage can provide the money to cover these renovation costs to enhance the property.
- Going Back to School or Starting a business- To help offset the costs of a new business venture or the tuition to go back to school and retraining, a second mortgage can cover the costs.
The Main Differences Between a Second Mortgage and a Primary Mortgage
Besides the obvious fact that a second mortgage is a subordinate mortgage on a property that already has a mortgage, several key aspects will differ:
- Length of the Mortgage-Unlike a principal mortgage with term lengths of 20 to 30 years usually, a second mortgage term is considered a short-term loan with a term length of no more than 5 years.
- Interest Rate- The interest rate on second mortgages tend to be higher than primary mortgages. This is because they are considered a higher risk loan by lenders. Rates usually are between 6 %to 8%.
- Usage of the loan– A second mortgage is taken out for different reasons than a first loan. Primary loans cover the cost of the home, while second mortgages help to cover other expenses along with helping to refinance the property.
Banks Are Not The Only Option- Mortgage Broker Store is Here To Help In Your Second Mortgage Financing Goals
Second Mortgages can provide borrowers with financial flexibility by taking advantage of funds built up in their own homes. Life can throw some curveballs and the ability to access equity to obtain a second mortgage can help provide financial peace of mind.
Mortgage Broker Store understands the needs of the borrower and we are always striving towards finding the best match when looking at your particular mortgage and financing needs. We work with a network of private lenders across the country and are more than happy to guide you in important decisions that you will be making during the private lending process. Feel free to contact us at your convenience to help facilitate your second mortgage goals.
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Second Mortgages in Ontario
When finances may be tight and credit may be a problem, looking into various lending options using your biggest asset can provide a sensible solution. Ontario homeowners can take advantage of existing equity in their home to take out a second mortgage loan secured against their property. If your credit score has been damaged as an Ontario homeowner you can turn to Ontario based private lenders to negotiate a secured second mortgage.
Mortgage Broker Store is here to help Ontario homeowners with any second mortgage applications. If the banks have turned you away we will be able to look to criteria beyond credit worthiness to help secure a second mortgage loan on your property. With a network of established private lenders across the Province, we will be able to work with you to tap into your home’s equity to take out a second mortgage. We will help free up money in your home to put towards immediate financial concerns such as home renovations, student loans or easing the strain of your primary mortgage. Learn how to get a Second Mortgage in Ontario
Private Mortgage lenders In Ontario
Ontario homeowners have a wide range of options when it comes to choosing a lender. Generally lenders will fall into 3 broad categories which include A lenders ( big banks), B lenders ( credit unions and trust companies) and C lenders ( private lenders). With increasingly stringent criteria imposed on Ontario homeowners when applying for mortgage loans by A lenders, many Ontario based borrowers turn to B lenders to apply for financing. If credit is in issue, however, these borrowers will not qualify for a mortgage loan. Don’t despair, private lenders will be able to negotiate loans based on other criteria including existing assets, all sources of income and the appraised value of your home.
Mortgage Broker Store is here to help Ontario homeowners with any mortgage loans that you may require, be it second mortgages, home equity loans, Home Renovations Lines of Credit (HELOC), bridge loans and consolidating loans. With access to a well established network of private lenders across the Province we will address your financing concerns and connect you with a private lender to negotiate mortgage loans to cover short term financial needs while you work to restore your credit. Learn more about Private Lenders in Ontario
Reverse Mortgages in Ontario
Ontario homeowners take pride in their homes. You have worked hard to pay off your principal over the years and look forward to owning your home outright. If you are 55 years or over your financial goals may have changed. You may also be in the enviable position of having paid off the principal of your mortgage loan or the bulk of it. If you are looking to pay for upcoming expenses such as possible home renovations, helping grandchildren or your adult children with finances, don’t take a personal loan, tap into the equity of your house with a reverse mortgage. Reverse mortgages can help you achieve peace of mind while taking advantage of the equity in your valued home.
Mortgage Broker Store can help you in your quest for a reverse mortgage. We are in the enviable position of having access to a vast network of Ontario based private lenders that will answer any question you may have. We will sit down with you and take you through the process of applying for a reverse mortgage. You have worked hard to own your home now make your home work for you. Learn more about Reverse Mortgages in Ontario
Home Equity Loans in Ontario
You have heard it before. Tap into the equity built up on your home. Why not try to consolidate your existing multiple debt payments and roll them into one monthly, easy to manage debt payment. By applying for a home equity loan, you are not only taking advantage of funds already built up in your property, but you can now look forward to one monthly payment with a lower interest rate than other high interest debt you may have including credit card payments.
Mortgage Broker Store can help you with any concerns you may have when applying for a home equity loan. We have vast experience in negotiating mortgage loans ranging from home equity loans to second mortgages, bridge loans and consolidation loans. With access to a vast network of private lenders across the Province of Ontario we will be able to connect you with a private lender to suit your needs and help you achieve financial peace of mind even if current credit issues have been a deterrent with other lending options. Learn more about obtaining a Home Equity Loan in Ontario
Bad Credit Mortgages in Ontario
Even if you are having current credit issues there are still lending options open to you. As an Ontario homeowner or borrower you may have been turned away by the big banks or credit unions based on your credit score. Private lenders can help bridge this financing gap by providing you with different secured mortgage loan options. We will base the criteria of these loan applications on factors beyond your current credit score. By accessing any additional assets you have, looking at all sources of monthly income and assessing the appraised value of your home private lenders can secure a mortgage loan to meet your short term financial goals.
Mortgage Broker Store can steer you in the right direction when applying for a bad credit mortgage. We have access to a broad range of private lending options, each with valuable experience and well established in the Province of Ontario. We will be able to address any questions you may have and work with you to solve your lending needs despite current credit issues. Learn more about how to obtain a Bad Credit Mortgage in Ontario
Debt Consolidation in Ontario
There is nothing worse than debt to provide ongoing worries. Multiple debt payments may give you sleepless nights. Ontario homeowners do have options to help navigate debt concerns. Rather than taking out another potential personal loan, look to utilizing existing equity built in your home to address ongoing financial issues. Even if your credit is damaged and the big banks may not be an option, there are many Ontario based private lenders that can work with you to take out a consolidation loan such as a home equity loan or Home Equity Line of Credit (HELOC). Don’t let credit issues dissuade you from taking the steps necessary to consolidate your multiple monthly debt payments into one monthly payment utilising funds that have built up on your property.
Mortgage Broker Store has access to a vast network of private lenders across the Province of Ontario that enables us to connect Ontario homeowners and borrowers with a private lender to address any credit issues while negotiating private mortgage loans. We will address any questions you may have and work with you to help you achieve your lending needs. Learn how to Consolidate Your Debt in Ontario
Stop Power of Sale in Ontario
If you have been late in mortgage payments and are currently in default of your mortgage loan, you may have found yourself in the midst of the process of Power of Sale on your home. Although there are legal issues to address, there are still steps that can be taken to possibly stop the Power of Sale going through on your home. Power of Sale still takes time and there are steps that your lender must follow in order to legally carry out a power of sale on your property. It is not too late to sit down with a private lender and take the necessary immediate steps to stop a power of sale going through on your home.
Mortgage Broker Store is here to help you in taking the steps to try to prevent a power of sale going through on your home. We have access to a broad network of private lenders across the Province of Ontario that are both experienced and well established. We will sit down with you, answer any question you may have while working with you to move forward on stopping a power of sale on your valued home. Learn more on how to Stop Power of Sale in Ontario