Many people cringe when they hear Second Mortgage. There is no need to avoid Second Mortgages as they have their place in the important world of mortgages. When used correctly, Second Mortgages have many benefits. Let’s take a look at Second Mortgages and see if they are an option for you.
What is a Second Mortgage?
A second mortgage, also nicknamed a piggyback mortgage, is when you borrow against the value of your home. That means you use home equity. You still need to apply for this loan, just like you did for your original mortgage. These Second mortgages are very helpful when you use them to pay off debt, do major home renovations or pay education costs.
Second Mortgages Come in Different Forms
- Line of Credit: a second mortgage that borrows money from a line of credit. You can take out money if you want to, but you don’t have to take out money. You have the option. There is a maximum borrowing limit, where you can borrow and repay up to that limit.
- Lump-Sum: this second mortgage is a standard type where a home equity loan is given in a one-time lump sum of money. You use it for whatever you need and repay the loan over a set time with monthly payments.
Why A Second Mortgage
Most people use a second mortgage to pay off financial obligations, such as other loans and high-interest debts, tuition, fund home renovations, or make a large, but necessary, purchase. Other uses for a second mortgage are paying off things like student loans, credit cards, and medical bills. Often renovations are needed and just cost more than what we expected. A second mortgage gets you the funds you need quickly and easily so you can fix your house. This is a type of loan that works for people in certain circumstances. Most people who look at this loan like the lower interest, more time to repay debts, and affordable monthly payments.
A second mortgage can be used to consolidate or pay off debt you have been having trouble with or you just want to pay off. Our experienced and licensed team of mortgage brokers at Brampton Mortgage Broker can help arrange a second mortgage to bring several different payments you are making all together into a single, low and affordable monthly payment. Depending on the amount you are looking to borrow, you can count on our team to help get your second mortgage arranged and funded quick and easy. Our average time to get a second mortgage arranged and funded from start to finish is within a few days to a few weeks. So that means you use that second mortgage to pay off your credit card debt or pay off other obligations may have like renovations or tuition in a matter of days or a few short weeks all at low and affordable monthly payments.
When is a Good Time for a Second Mortgage?
There isn’t much of a waiting time when you apply for a second mortgage. You just need equity, as mortgage lenders want to know how much equity you have, as well as the amount of debt. As long as you have equity and are able to make regular payments, a second mortgage can be a good idea. Second mortgages can help you manage your expense better as you can lower your monthly payments and make them more affordable by saving money, which will allow you to have money available for other expenses.
The Benefits and Advantages of a Second Mortgage
- Higher Loan amounts: second mortgages allow you to borrow larger amounts in a loan because your home is being used as collateral. For some loans, you can borrow up to 85% of the value of your home.
- Lower Interest rates: you will notice this type of loan usually has lower interest rates than other loans. By securing your loan with your home, it is less risky for your mortgage lender, and they are more willing to work with you.
- Rebuild your Credit Score: it is also good to know, if you use a second mortgage to pay off debts, you will be helping in rebuilding your credit score as the debt that is attached to your credit will be paid off in full. As long as you keep up with the new second mortgage payments and maintain your credit moving forward your credit score will start to increase over a few short months to a years time.
Note: keep in mind that a second mortgage is a loan, and the funds still need to be paid back in regular payments. The second mortgage is also tied to your home so if you don’t pay the money back or miss multiple payments, you can find yourself in a situation where you could look at the possibility of losing your home.
What do you need to qualify for A Second Mortgage?
When you decide to get a second mortgage, you will need to provide information on your income, equity, property, and credit score. Home Equity is important to have, and if you have home equity, you will have an easier time qualifying for a second mortgage. If you can prove you can make regular payments towards utilities, that will help you qualify easier as well. This is because you can show lenders your source of income is reliable and steady enough for you to make regular payments on the second mortgage loan. If you have a high credit score, it also helps your chances of securing a second mortgage quickly. It can also make your interest rates lower.
Why Should You Use Mortgage Brokers To Get a Second Mortgage?
It is important to know that our experienced and licensed team of mortgage brokers at Brampton Mortgage Broker have years of experience in arranging second mortgages for many clients and we know how to get our clients results they feel proud of. Our experienced and licensed team of mortgage brokers at Brampton Mortgage Broker are able to arrange you a second mortgage with low and affordable monthly payments, so you can stop stressing over your finances and start saving money each and every month.
But here are some more points you can read over to get a better understanding of how our Brampton Mortgage Broker team can help you with getting a second mortgage.
- Mortgage brokers have expert resources to help them find the right lenders, banks, insurance companies, trust companies, and private funding to find the right mortgage for your financial situation.
- Brokers have access to better rates and more access to a variety of loans. Mortgage brokers have ongoing training to help all people, even those with poor credit. Brokers have the experience, knowledge, and industry contacts to find the best loans.
- Mortgage brokers are often smaller institutions than banks, and this allows them to give you flexible, more personal service, among other options.
- Finally, mortgage brokers save you time, money, and energy. You just need to fill out one application with a broker, and then the broker takes it from there and sends them out on your behalf.
Second Mortgages may not be for everyone, but they could be just right for you. Speak to our experienced and licensed Brampton Mortgage Broker team and discover that qualifying is quick and easy. If you want any further information about second mortgages or what is available for your financial situation, please contact our Brampton Mortgage Broker team today.