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16
Sep

Top 3 Reasons Why You Should Get a Second Mortgage on Your Investment in Canada?

Canadian homeowners are beginning to understand that majority of their net worth is actually tied up in their homes. With the rising real estate prices and regular monthly mortgage payments, these consumers are discovering a constantly increasing equity in their homes. Second mortgage is something that can help you transfer that additional equity value from the paper to your bank account in the form of disposable funds.

2nd Mortgage

What is second mortgage?

Simply put, second mortgage is nothing but a type of loan that gets you cash in exchange of equity in your property, even if you have another already running mortgage on it. There is no interference in your current loan arrangement (unlike refinancing). Rather, it is a type of an additional debt against your property. In the event of a default, it is the original mortgage holder who gets paid off first and anything remaining goes to the second mortgage lender. As second mortgage takes the second-place in legal hierarchy, it normally comes at a higher interest rate than other types of mortgage products.

Why second mortgages are worth consideration?

Anyone who wishes to benefit from the worth built up in his/her property should know that getting a second mortgage is an excellent way of doing it. It enables the homeowner to translate the paper value of his/her property into a better bank balance. Rather than getting tied up with your home equity, you can use the funds generated from it and invest or spend it in any way you feel appropriate.

Some of the reasons why second mortgages are worth considering are:

Unrestricted use of money – Rather than letting your home’s equity remain merely a number on a paper, you can take advantage of it and use the money generated for whatever purpose you deem fit. The funds can be utilized for business opportunities, home repairs, investments, debt clearance or for simply some leisure time with family.

They don’t interfere with your first mortgage – As the interest rates are going up north with each passing month, Canadians are avoiding refinancing their loans. Doing so is preventing them from cashing in on the true value of their properties. By opting for a second mortgage, you continue to enjoy low monthly instalments on your first mortgage and yet are able to tap into your property’s true value.

They can be obtained easily – Several homeowners face difficulty refinancing their mortgages owing to personal finance problems. As second mortgages are more dependent on your property’s equity rather than your personal financial situation, the approval comes much easily in comparison to refinance or a standard loan. Additionally, many financial institutions vie with one another, offering excellent interest rates.

Conclusion

With the ever increasing real estate values, Canadian homeowners are discovering that they have far more equity in their properties than they had thought. As refinancing may not be a feasible option for many homeowners owing to their personal financial issues or perhaps low locked in interest rates, second mortgages provide an excellent means to benefit from the rising real estate prices without disturbing any other financial agreements in place.

 

by Benson Mortgage
in Refinancing