A private second mortgage can be a lifeline when the banks say no. It lets you borrow against the equity in your home through a private lender rather than a traditional bank, which means approval rests on your property, not your credit score or income. If a bank has turned you down, here are five things you should know. At Turnedaway.ca we arrange private mortgages and second mortgages for Ontario homeowners the banks decline.
1. Private Lenders Care Most About Your Equity
The biggest advantage of a private second mortgage is that equity is the main consideration. A big bank has to follow strict, one-size-fits-all rules, so a low credit score or an income issue often means an automatic no. A private lender looks at your home instead. If you have enough equity, you can be approved even with bruised credit. It can take the form of a home equity loan paid as a lump sum.
2. A Private Second Mortgage Can Be Used for Almost Anything
Whatever you are trying to do, a second mortgage can usually help. Common uses include:
- Paying off property tax arrears
- Stopping a power of sale
- Consolidating high-interest credit card debt and paying it off faster
- Clearing what you owe the Canada Revenue Agency
- Home improvements that add value
The funds are yours to direct, but because you have to repay the loan, it is worth being deliberate about what you use them for.
3. It Can Help You Bridge a Job Loss
If you have lost your income, your home is a valuable asset but not a liquid one. A private second mortgage can unlock that equity when you need it. For some borrowers, a lender can even arrange the loan with payments prepaid for up to one year, added to the loan amount up front, so there is nothing to pay out of pocket while you get back on your feet. That is something a traditional bank, which insists on current income, will not do.
4. Private Lenders Are Investors
Private lenders are investors, and when you have equity, they are usually willing to lend. In exchange for taking on more risk than a bank, they charge a moderately higher rate. Even so, it is often well worth it: clearing a problem that is looming over you, on flexible terms, has real value. An experienced broker who specializes in second mortgages will secure the best rate and terms available for your situation.
5. Not All Private Lenders Are the Same
Many homeowners hear “private lender” and assume it means expensive or complicated. It does not have to be either. Working with an experienced broker keeps the process cost-effective and transparent, and gives you access to a wide network of reputable private lenders rather than whoever you happen to find on your own.
The Bottom Line
The traditional banking world is not built for difficult situations. For homeowners who have hit a setback, a private second mortgage offers a way to turn a tough spot into something manageable. Turnedaway.ca has decades of experience arranging second mortgages and private financing for clients the banks decline. Call us for a free consultation at 1-855-668-3074 or apply online today.
Frequently Asked Questions
What is a private second mortgage?
A private second mortgage is a loan from a private lender, secured against your home behind your first mortgage. Approval is based mainly on your equity rather than your credit score or income, which is why it works when a bank says no.
How much can I borrow with a private second mortgage?
Approval typically stays within 80% of your home’s value, combining your first mortgage and the new second mortgage. The more equity you have above that, the more you can access.
Can I get a private second mortgage without income?
Often yes. For some borrowers, payments can be prepaid for up to a year and added to the loan, so there is nothing to pay out of pocket while you are between jobs or waiting for income to return.
