When you find yourself needing more space in your house or possibly a bigger house, then a second mortgage may just be the solution you’re looking for. This solution often serves several purposes and it is often called by several different names. Here you’ll learn all about obtaining a second mortgage in Vancouver as well as its advantages and disadvantages.
A second mortgage isn’t just another mortgage that’s secured against your home. Rather, it’s a loan that cannot have priority in case of default. Your first mortgage will always have priority and should always be paid first before any of your funds can be applied on the second mortgage.
DO YOU NEED IT?
Now, why should you risk your home by taking out a second mortgage? Well, this option is ideal for when you find yourself in need of a considerable amount of money. This is especially useful if you don’t have unlimited credit and aren’t likely to have the necessary cash lying around somewhere. Your home is perhaps the only thing you have that has high value and lots of equity, which is why contacting your Vancouver mortgage broker may be the best option in some cases.
Among the most common ways you can benefit from a second mortgage are the following:
- Home improvement
- Buying an additional home
- Debt consolidation
- Creating a HELOC
- To avoid private mortgage insurance
There are several other ways you can benefit from a second mortgage, but they may not always be wise. Every time you’re tempted to tap this source of a huge amount of money, always remember that you’ll be securing the loan against your existing home. You may want to seek the advice of your mortgage broker before taking out this type of loan.
Now that you know how you can benefit from a second mortgage to your advantage, you’re probably wondering what the disadvantages are.
- Your home is put at risk. This is the most serious disadvantage of a second mortgage. And it is for this reason that you should seek advice from your mortgage broker and ensure that the intended use of the money is well worth the risk involved.
- It carries higher interest rates. This type of loan is riskier, which is why it typically has higher interest rates. The good thing is that the rates are still much lower than other alternatives like credit cards.
- There are usually hefty fees involved. Taking out a second mortgage often requires you to jump through several hoops and pay for more than a few services. These fees alone should make you think twice before calling your mortgage broker for such a loan.
Perhaps the best news for you is that this type of loan can be found just about anywhere. Your best bet, of course, is to first approach a mortgage broker with whom you’re already doing business. That’s a good way to save money on fees. Remember that lenders may not be too thrilled to grant this type of loan in the present economy, but that doesn’t necessarily mean they won’t. You just really need to know whom and how to ask.