While there are many sources for obtaining 2nd mortgages in Kitchener,
there a few things to consider and research before deciding if this line of
credit is your best option. Second mortgages are a common way for homeowners to
access large sums of money unavailable through traditional means of credit
lending. Whether for home-improvement projects or paying for a child’s
post-secondary education, a secondary mortgage may be a great way to
consolidate debt and lower interest rates without having to refinance your
home. Here are some things to take into account before applying:
1. Create a Budget to Check if Payments
are Realistic and Feasible
Taking out a 2nd mortgage is only a viable solution if you are able to
ensure payments are made on time and as outlined in your loan agreement.
Drafting out a realistic budget of your fixed and variable expenses against
your income will allow you to gauge whether the payments will be feasible.
Remember, you are putting your home up as collateral, which is nothing to be
2. Determine Your Home’s Equity
To calculate the equity of your home, you will need to obtain an
appraisal for the value of your home and subtract the amount you currently owe
from your original mortgage. It is wise to obtain a professional appraisal to
determine your home’s current market value. Yes, you will likely need to pay a
fee for this, but it will be necessary when it comes time to apply for a second
3. Find Out Your Credit Score and Arrange a
Meeting with Your Bank/Mortgage Lender
A good credit score is vital when considering a second mortgage. It
will allow you to get a lower interest rate and give confidence in your lender
that you are a good candidate for this financing option. Arranging a meeting
with your current lender is the first step in your research. They will be most
familiar with your situation and will provide you a solid basis for comparison.
4. Shop Around
Similar to buying a car or home, you should always explore all options
before making your final choice. Whether online or through brick-and-mortar
establishments, ask for quotes and details on their payment policies. You don’t
want to get stuck with heavy penalties and hidden fees. Use the rate you had
quoted by your original lender as a base for comparison.
5. Research Other Types of
Although second mortgages are a great way to access a large sum of
cash, there are a number of expenses, such as appraisal fees, applications, and
closing costs, which come with applying for a second mortgage. Speak with a
lending expert to ensure you have been made aware of all options before
deciding on this route.
With many young professionals relocating for jobs and a growing student
population, Kitchener is a fantastic option for those looking to invest in the
real estate market. Home values are likely to continue rising as more potential
home buyers seek up incoming neighbourhoods. If you are considering 2nd
mortgages in Kitchener, take the time to get a professional appraisal, obtain a
credit score, and shop around for lenders to get the most for your home.