When Can a Second Mortgage be a Smart Move
April 19, 2018 | Posted by: Sherry Corbitt
Every month, you put money against your mortgage. Over the years, thanks to all those payments (and a healthy increase in home values), you’ve built up some equity. Way to go! Sometimes, we want to be able to tap into that equity. But new mortgage rules have made it harder to refinance a mortgage. No surprise, then, that we’re seeing a jump in second mortgage financing. Here are six reasons why a second mortgage might be a smart move for you too:
- A second mortgage can be a great way to access available equity without having to break your first mortgage.
- Ability in some cases to refinance up to 85 per cent loan to value.
- Second mortgage interest rates can be significantly less than credit cards. You can use the second mortgage to pay off your high-interest credit card debt, which will clean up any bruised credit and get you in a better position to qualify for the best rates later.
- Ability to use this lower-cost financing as you see fit – pay off debt, renovations, cash flow for your business, an investment, tuition, wedding, trip, or other major expenditure.
- That second mortgage can help you complete your purchase if your down payment is a little short of what you need.
- A second mortgage is often easier to qualify for than a secured line of credit.
The value you’ve built up in your home is a wealth-building tool, and usually the best place to borrow funds when you need them. That’s why – for a growing number of financially savvy Canadians – a second mortgage can be a smart move!