A 2nd mortgage uses the equity in your home as collateral to secure a loan. If you need to borrow money fast, a second mortgage can give you access the funds you need. You don’t have to make any changes to your primary mortgage (1st mortgage) and can continue paying at the rate you’ve locked down. A second mortgage is a separate loan that should be based on how much home equity you have. If you’ve got the equity, your past history or “credit-worthiness” should be a lesser factor. As a result, a second mortgage is easier for a homeowner to qualify for. If you experience a disruption in income, have damaged credit, or have fallen into debt, an equity-based loan can help you get back on your feet again.
How is My Home Equity Calculated?
What is a Second Mortgage?
A second mortgage uses the equity in your home as collateral to secure a loan. If you need to borrow money fast, a 2nd mortgage can give you access the funds you need. You don’t have to make any changes to your primary mortgage (1st mortgage) and can continue paying at the rate you’ve locked down. A second mortgage is a separate loan that should be based on how much home equity you have. If you’ve got the equity, your past history or “credit-worthiness” should be a lesser factor. As a result, a second mortgage is easier for a homeowner to qualify for. If you experience a disruption in income, have damaged credit, or have fallen into debt, an equity-based loan can help you get back on your feet again.
How is My Home Equity Calculated?
Qualifying for a Second Mortgage (What Do I Need?)
Qualifying for a 2nd mortgage is highly dependent on home equity. Big banks have stricter guidelines that require more than equity for you to qualify. Fortunately, second mortgage guidelines are less strict. Your home equity is more important than any other lending criteria. The game changes when income and credit history are removed from the application equation. Many homeowners who wouldn’t get a loan at the bank are approved hassle-free. To find out if you would qualify for an equity-based loan, start by estimating your home’s equity. Your home equity is determined by subtracting any of your current mortgages or liens from the current estimated value of your home.
What is a Second Mortgage Used For?
Access to your home equity can unlock many possibilities. Many homeowners use a second mortgage to reduce higher interest debts. Debt consolidation via a home equity loan can help you to avoid paying a lot of extra interest on what you owe. The sky is the limit. Here are a few ideas if you’re considering a 2nd mortgage:
- Use your home equity for important repairs, renovations or home improvements/upgrades.
- Borrow to repair your bad credit and improve your credit score.
- Pay off property tax arrears or income tax arrears to avoid a CRA tax lien against your property.
- Reduce credit bureau reporting time by paying off consumer proposals and bankruptcies early.
- Leverage equity to prevent judgment creditors from forcing power of sale or a foreclosure.
An added bonus – 2nd mortgage lenders don’t restrict how you spend the money you borrow. Essentially you can use your loan for any purpose. Your lender won’t direct how you disburse the funds. You can do one of the aforementioned things or many of them – it all depends on how much you borrow.
Can I Get a Second Mortgage?
If you’re exploring second mortgage options that means you’ve got a primary mortgage. Some of the value of your home is already “secured” to that first loan. If you’re applying for a second mortgage, check and make sure that you have value beyond the balance owed on primary mortgage. The gap between the two is the equity that you can apply to borrow. However, under a second mortgage you cannot borrow so much that your home’s value is leveraged at 100%. Most lenders will let you go as high as 85% of the value of your home. What does this mean? It means that there is at least 15% of your home’s value that you cannot borrow.
So, the first question to ask is how much equity you have beyond your first mortgage, less other liens against your property. Our online Home Equity Calculator is an easy way to see how much equity you’ve got. Next, ask yourself if you’ve got enough equity to borrow some of it. Check to see if the total of all loans against your house add up to more than 85% of its value. If all “secured” items add up to less than 85% you have an equity pool. If you can borrow what you need from this pool, you can apply for a 2nd mortgage with a pretty realistic chance of approval. You may not need all of the equity you would be entitled to. We recommend you apply for what you need.
Where to Get a Second Mortgage
Unfortunately, if you visit your bank, you’ll find out that a 2nd mortgage may not be under their purview. While the “big 5” banks are a popular choice for primary mortgages, secondary financing can be tough to qualify for. Banks generally offer equity loans in the form of something called a HELOC (home equity line of credit). However, to qualify, you’ll have to meet criteria set by stiff government regulations. Banks don’t make these products easy to get. By comparison, a second mortgage application via a mortgage broker is much easier. The application process gets even easier with the more equity you have. If you’ve got a lot of home equity, you should have no problem getting approved.
Why Choose Secondmortgage.ca for Your Second Mortgage?
We’re the home equity experts. We’ve been helping Canadian homeowners for more than 30 years – our experience can work for you too. We’ve helped countless property owners who have equity to arrange second mortgages for whatever purpose they need. We’ve fostered and cultivated the best lending relationships. We have expertise in getting even the most complicated deals approved. Our team works hard to get the payment flexibility you need. We’ll always try to get you the lowest possible monthly payment to make it easy for you to repay your new loan.
We’ve developed great relationships with a large pool of private lenders and mortgage investment corporations. Fortunately, we’ve also maintained connections with bank loan officers so that we can offer you many possible solutions. Our private lenders are vetted and willing to be flexible with new clients. For the best 2nd mortgage rates and terms, give us a call 1-855-668-3074. You can also apply online to be approved for your second mortgage today!
What do I need to qualify for a 2nd mortgage?
The simple answer to this question is equity. The guidelines to being approved for a second mortgage rely almost solely on how much equity you have in your home. Your income and credit history won’t play a large role in whether or not you are approved. To calculate the equity in your home you must subtract any mortgages and/or liens attached to the home from the current estimated value of your home.
You can’t borrow 100% of the value of your home. However, most lenders will entertain lending as much as 85% of your home’s value, less any mortgages or liens against it. You can use our Home Equity Calculator to see how much equity you have.
What can I use 2nd mortgage funds for?
Second mortgages and home equity loans come with very few stipulations!
The Bottom Line on Your 2nd Mortgage
We offer Second mortgages quickly and without the hassle of supplying a lot of documentation. Most 2nd mortgages are simple to apply for and can be used for just about anything. Secondmortgage.ca specializes in arranging second mortgages. Our primary focus in this area means that we can offer low rates with very flexible terms. Regardless of your circumstances, you can rely on our experience to get the job done. Give us a call toll-free 1-866-306-2637 or apply online. Find out why we should be your 1st choice for a 2nd mortgage!