Second Mortgages for Second Chances

Equity Mortgage

Second Mortgage

Take advantage of your home’s appreciation to improve your standard of living, reduce high-interest debt or have emergency access quickly, to funds you need. Leveraging the low-rate environment in Canada, use your home’s equity to manage debt more effectively or to renovate your home, improving its value that will pay off over time. An alternative option for homeowners to access their home’s value to consolidate high-interest debt, without paying penalties. It’s the quickest way to resolve an unplanned expense. Stay diligent and achieve financial success sooner with the support of a second mortgage.

Square Capital works to offer innovative mortgage solutions working with prime and private lenders to provide borrowers with fast 24-hour mortgage funding options (subject to terms and conditions).

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Second Mortgage

A second mortgage is a loan secured against your property, registered after your first mortgage. This means if a homeowner defaults on payment, the first mortgage will be paid and what remains goes to the second mortgage holder. The lender providing the second mortgage is taking a bigger risk and that can cause the interest rate to be higher in addition to fees.

There are benefits of second mortgages for homeowners, especially in a historically low-rate environment.

It can be used to consolidate high-interest debt, even though the interest rate for second mortgages are higher than first mortgages, they are usually lower than high-interest rate debt such as credit cards, department store cards, and car loans.

Second mortgages can help when homeowners are dealing with a bad credit situation. Since there is equity in your home, lenders are willing to provide second mortgages since the house will be used as collateral. By getting a second mortgage to pay off high-interest debts, homeowners will be able to address their bad credit and start the process of credit repair.

Homeowners are experiencing increased property valuations and seeing their home equity increase in Toronto and across Ontario. Borrowers can leverage this equity with a second mortgage to start their own business or pay for children’s education. Low interest rates are enabling Canadians to invest in themselves and their families.

Second mortgages are often utilized for urgent or emergency situations, allowing homeowners to tap into their home’s existing equity quickly. Square Capital supports this by working closely with lenders to get your mortgage funds to you fast.

Homeowners are able to make home improvements and renovations with a second mortgage. Sometimes it is cost-effective to take out a second mortgage instead of breaking your first mortgage and dealing with the cost of penalties.

Second mortgages can be used to borrow for investing. There are tax advantages to leveraging home equity to invest. Any investing solutions and tax advice should be discussed with professionals.

Homeowners can leverage Canada’s historic low-interest-rate environment, along with Ontario’s increased property values to purchase a vacation such as a cottage or second home. A second mortgage will provide the flexibility of borrowing against the home’s equity to grow your lifestyle and your real estate portfolio.

Homeowners are positioned to leverage home equity in a market with price appreciation. This enables self-employed homeowners to borrow against their property to build or expand their businesses.

Advantages of Second Mortgage

  • Lower interest rates – Homeowners can take advantage of the lower rates available for second mortgages to pay off a high-interest debt to save money.
  • Tax-deductible – In Canada there are tax-friendly benefits for investing and self-employed.
  • Fast access to equity – Homeowners who may not have access to capital can take advantage of home equity to invest, build their businesses, or payoff debt quickly.
  • No penalties – Avoid paying penalties by breaking an existing mortgage.

Disadvantages of Second Mortgage

  • Higher upfront costs – As second mortgages are considered riskier by lenders, interest rates and fees may add to the cost of borrowing.
  • Reduces access to home equity – As a second mortgage is registered against the home’s equity in addition to the first mortgage, borrowers will not have access to the remaining equity until the mortgage loan is paid down.

Home Equity Mortgage Options

Second mortgages are of one of the options homeowners can opt for when considering leveraging home equity. Depending on the ability to qualify, there are several types of mortgage products borrowers can choose to borrow from the equity they have built.

  • Mortgage Refinance: The lowest rate option is a mortgage refinance. Homeowners can tap into their home’s equity and quickly have access to cash for investment. As home equity increases in Toronto and cities across Ontario, along with low-interest rates, homeowners may want to consider this option.
  • Home Equity Line of Credit – The home equity line of credit or HELOC enables access to the home’s equity, just in a different way. Instead of a single (or lump sum) payment, a HELOC provides ongoing access to a certain amount of money, similar to a credit card, but with a much lower rate. The amount of the HELOC depends on the value of the home.

The benefit of a line of credit is that payments are interest-only payments and homeowners can access it when needed. Downsides include variable interest rates and access to the total amount of the HELOC, which could lead to more unwanted mortgage debt. That being said, there are opportunities to lock in rates to protect monthly mortgage payments.

Questions about Second Mortgage

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Other Mortgage Options

Home Equity Line of Credit (HELOC)

Access your home’s equity to use as much as you need and only pay the interest.

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Private Mortgage

For different life situations, private lenders help with access to short-term, interest-only mortgage loans.

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Reverse Mortgage

Canadian homeowners 55 and older can access up to 55% of their home’s value.

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Poor Credit

A Poor Credit Mortgage can Improve your Financial Health

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Other mortgage options

Homeowners have choices and can consider options to leverage their home equity. Depending on the product, these options may have slightly higher interest rates.

Private Mortgage

When homeowners cannot qualify for a mortgage to refinance through a bank mortgage debt consolidation or a home equity line of credit (HELOC), private mortgages may be an alternative. Since private mortgage lenders will secure a mortgage debt consolidation against a home, the interest is usually lower than high-interest debts like credit cards.

Private lenders usually charge a higher interest rate and fees than a bank, given the higher level of risk, however, this option still reduces interest costs over time. This is because these lenders understand that situations exist such as quick turnaround for financing, bad credit, stated income, and non-conventional properties.

Typically, private mortgages are shorter-term products and only require the interest portion to be repaid. Private lenders evaluate risk differently than traditional lenders and will consider the borrower’s ability to repay which is beneficial to self-employed and people with bad credit. Private lenders can also provide debt consolidation options through second mortgages.

Reverse Mortgage

An option available to homeowners 55 and older is reverse mortgages that provide access to the home’s equity without having to sell. Reverse mortgages allow homeowners to borrow up to 55% of the value of the home. The concept of this mortgage is essentially a reverse loan that means there are no payments required. Payments will be made either in monthly payments or in a lump sum payment to homeowners. Homeowners will pay the reverse mortgage loan when they move, sell or the last borrower dies. Typically, the interest rate is higher, and there are fees additional associated with reverse mortgages.

Debt Consolidation Mortgage

To understand if a debt consolidation mortgage or a HELOC could be suitable options to consolidate debts, and help get your life back on track, contact Square Capital Mortgage Brokerage. We understand each case is unique and there are many factors to consider including homeowners with bad credit or low income. Unlike traditional lenders like banks and financial institutions, with very strict lending terms, Square Capital works with over 50 lenders, including private lenders, to find the right solution for our clients. Our expert mortgage brokers and agents will help to find solutions to lower your monthly payment and reduce or stop the interest on your debt. Lower monthly payments every month reduces the chances of financial default while improving your credit and managing your money wisely.

Learn more about leveraging home equity for products such as mortgage refinance, home equity lines of credit (HELOC), and second mortgages.

Budget Planning and Expense Tracking

While products like debt consolidation mortgages, HELOCs, and private mortgages are tools to financial freedom, managing debt is the key to success. Practicing better money management in daily life like budgeting, monitoring spending, and saving. There are many free online apps that can support homeowners to achieve financial freedom and get better at managing money.

Get Started with your Second MortgageToday

Getting a second mortgage can be challenging and overwhelming at times. Square Capital can help you get a second mortgage for you regardless of your situation and need. We can help you determine exactly how much you can afford. Start your second mortgage online.

Questions? We’ll Put You On A Right Path!

Contact us today to get a free quote. We will help you understand the current market conditions affecting the mortgage market! Prequalify without affecting your credit!

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