Private Second Mortgages – 5 Things You Should Know
When you’re hoping to get a little extra cash, one way to do so is with the help of a second mortgage.
Second mortgages, often referred to as home equity loans (because it sounds prettier) can allow you to use the equity in your home to get the cash you need for a number of reasons. However, it can be difficult to get a second mortgage from a traditional bank because of its strict regulations. Instead, you will be better off working with a mortgage broker, like TurnedAway.ca who can provide access to alternative lenders.
If you’re wondering what private second mortgages are all about, here are five things you should know:
Private Lenders Care Most About Your Equity
First of all, one of the best features of private second mortgages is the fact that equity is the most important consideration. When you go to a big bank to get a 2nd mortgage or a home equity line of credit, you’re going to have to jump through a bunch of hoops.
Most traditional banks have to make decisions based on strict rules set out by the Bank of Canada. So, if you have a poor credit score, or you have an income issue, or there’s some other problem, you won’t get approved.
Private lenders often referred to as alternative lenders, care mainly about your equity. If you have enough equity in your home, consider yourself approved — even with poor credit.
Private Second Mortgages Can Be Used for Just About Anything
No matter what you’re trying to do, a second mortgage can probably help. There are a number of ways to use the money from a second mortgage, including:
- Pay off property tax arrears
- Prevent foreclosure and power of sale
- Make home improvements
- Consolidate high interest credit card debt and pay it off faster
- Pay off what you owe to Revenue Canada
It’s even possible to use money from a second mortgage for a vacation or for emergency costs. However, it’s important to carefully consider what you need because you will have to repay the loan.
A Private Second Mortgage Can Help You If You Lose Your Job
If you’ve experienced a job loss, you might be running low on funds. You have your home, which is a valuable asset, but it’s hardly a liquid form of cash. This is where private second mortgages in Ontario or anywhere else in Canada, for that matter can help.
Some private lenders are even willing to provide you with a second mortgage — even without income. They deduct the monthly payments from the loan they are providing in advance. Thereby, giving you up to a year before you have to start making payments.
This arrangement is something you won’t see with the traditional banks. Instead, they’ll insist that you have an income right now. That doesn’t help you get out of trouble. With a private lender, you have more flexible options. An influx of cash can be a big help while you look for work.
Private Lenders are Investors
Private lenders are investors, and when you have equity, they’re often willing to lend the money. However, it’s important to understand that most private second mortgages come with higher interest rates than you would see with a more traditional bank and a home equity line of credit. Because these lenders are taking on a larger risk than most big banks, they do expect to see a moderately higher return.
Even so, most times it’s still worth it to get a second mortgage. Just being able to take care of problems looming over you — and do so flexibly — can be worth it. An experienced mortgage broker specializing in second mortgages will be able to secure the best rates with the most flexible terms.
Private Second Mortgage Lenders are Not Created Equally
Many homeowners hear the words “private lender” and immediately think it’s either going to be too expensive, too complicated or are reluctant to deal with them because of the unknown. However, this shouldn’t be the case. Private mortgages don’t need to be expensive or complicated. An experienced mortgage broker can ensure the process is both cost-effective and transparent.
TurnedAway.ca has decades of experience in the mortgage business — and we routinely work with a variety of private mortgage lenders. In fact, we specialize in approving clients who have challenging situations.
As a result, we can arrange the most flexible terms with the lowest rates even when you need an approval fast. Dealing with a broker who specializes in private mortgage financing will ultimately save you time money and a lot of headaches!
Unfortunately, the traditional banking world isn’t set up for difficult situations. As long as you’re already in good shape, it’s fairly easy to get what you need. However, for those who have experienced setbacks or made mistakes, the big banks just aren’t an option.
For many homeowners, private second mortgages offer a way to take a tough financial situation and turn it into something manageable. Whether you are looking for a private second mortgage in Toronto or Vancouver, we can help. Our expertise can help make even the worst situation seem manageable, even when your funds are required fast.
Give us a call for a free consultation at 1-855-668-3074 or apply online and have your approval in as little as 24 hours! Let us put our experience to work for you.