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A 2nd Mortgage for Debt Consolidation – Unlock Your Home Equity

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Taking out a 2nd mortgage for debt consolidation is one of a host of reasons a homeowner may wish to take out a 2nd mortgage on their home.  This practice, also called refinancing, is also common for people who are able to renew their mortgage at a better rate, or get a shorter amortization period.  Are you interested in taking out a 2nd mortgage for debt consolidation? Read on to find out more.

What is a 2nd Mortgage?

A 2nd mortgage is an additional mortgage that can be taken out from the bank while the first mortgage is still active.  The homeowner then uses the newly acquired mortgage to pay off the first. Refinancing allows homeowners to tap into the equity they have already built up in their homes. Homeowners may do this for several reasons, such as securing a lower interest rate, using the extra funds to invest in another venture, or to consolidate their debt. This practice is also commonly called taking a home equity loan, or refinancing your mortgage.

Taking Out an Additional Mortgage for Debt Consolidation

Some homeowners find themselves deep in consumer debt, paying a large amount of monthly interest on their loans.  If they have enough home equity, they may be eligible for a loan from the bank against their home. With this loan, they can immediately pay off all outstanding debts, as well as consolidate and decrease the overall interest rate they will owe monthly. Typically, credit card interest rates are much higher than home equity loan rates. For this reason, it can be very financially sensible to take out a 2nd mortgage for debt consolidation.

A Mortgage Expert

If you are interested in seeking more information about securing a 2nd mortgage on your home, the next step is to talk to a mortgage expert and get an opinion. It is important to examine your decision and how it fits into your larger goals. Usually, a 2nd mortgage is a good option for homeowners who do not plan to move for several years. Mortgage professionals can tell you which interest rate programs will work best for you within your larger, multi-year financial plan.

Fees and Fine Print

Taking out a mortgage is a financial undertaking that has to be done by a professional and must uphold to legal scrutiny.  For this reason, there are fees associated with taking out a mortgage. Before you go forward with this decision, make sure you are aware of all the fees that might be applicable in the transaction – and be sure to crunch the numbers and make sure the move is really beneficial. It is also important to remember that mortgage rates are historically low at the moment and are likely to go up. Your mortgage planner will help you navigate these waters and may recommend a fixed rate rather than a variable rate mortgage.
For many Canadians, a 2nd mortgage is a very sound option for debt consolidation. If this seems like something that might be a good option for you, learn more today, and a decade from now, you will be closer to your financial dreams. 


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