A second mortgage is also known as a home equity loan. You get a second loan on top of your original home loan, and the amount is based on the amount of equity you have built up in your home. The longer you have been in your home, the more equity you are likely to have. You are also likely to have built up a good deal of equity if you live in an area that has seen an explosion in real estate values.
Whether you have built up $5,000 in equity or $50,000, here are a few reasons why you might want to consider a second mortgage:
Pay for Updates
Home renovations are not cheap. The least expensive renovations typically cost a few thousand dollars. Yet some updates, like a new roof or a new kitchen, can cost tens of thousands of dollars. Most people don’t have that much money in savings and ready to use. If you find yourself needing to make renovations or repairs, a second mortgage may be the best option for financing them.
Pay Off Debts
Since you have already paid off a considerable amount of your home loan, Toronto second mortgages tend to offer a much lower interest rate than you’re likely to get on any other line of credit. You can use your second mortgage to pay off other high-interest debt, such as credit cards or personal loans. You’ll be able to pay off debts faster thanks to the lower interest rate and the single, consolidated payment.
Finance another Investment
You can use the money from your second mortgage to make a down payment on another home, to finance a new business, or to fund another investment. Different lenders have different limitations on what they will approve a second mortgage for, so it’s important that you know these rules before you apply.
Shop around for lenders offering a Mississauga second mortgage and bad credit mortgages to get the very best rates, regardless of your credit. These loans can make the difference to meeting your financial goals, so make sure you get the right terms.