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What Should I Ask a Lender When Considering 2nd Mortgages in Markham?

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With housing values on the rise in Toronto and the GTA, 2nd mortgages in Markham are a potential way for homeowners to tap into their home’s equity for large sums of cash. Obtaining a mortgage can be confusing in itself, so homeowners need to take the time to research and ask questions when considering a second mortgage. Unlike refinancing, a second mortgage is simply a loan against a home’s existing equity.
 
Here are a few questions to consider asking a potential lender during your search:
 

Do You Specialize in Mortgage Plans?

 
While there are a number of ways to obtain a secondary mortgage, you will want to seek the advice and assistance of someone who specializes in mortgages and creates mortgage plans. Your potential lender will provide you all the necessary information, outline the process, and help you determine if a second mortgage is indeed your best option. Remember, a financial advisor shouldn’t be just trying to sell you the option that gives them the best outcome. They should be looking to help you find the solution suited to your needs and situation.
 

What Is an Appraisal? What Are the Closing Costs?

 
One of the catches that comes with applying for a second mortgage is the need for home appraisals, closing costs, and other application fees. The Canadian Association of Accredited Mortgage Professionals defines an appraisal report as "an independent assessment of a property by a qualified individual. A statement giving an opinion of value of an adequately described property, as at a specific date and supported by pertinent data” (Source: CAAMP). It is necessary for a borrower to obtain a professional appraisal of their home’s value to determine the amount of equity available for a loan. You should also ask your lender what other closing costs you may need to foot the bill for, so you can budget accordingly.
 

How Long Have You Been in Business?

 
When you are putting your most valuable asset up as collateral, you will want to know the person handling it is professional and experienced. Don’t be afraid to ask a lender how long they have been in the business and how many years of experience they have.  
 

What Is the Interest Rate for My Loan?

 
You will want to make sure your lender outlines in writing the interest rates they are able to offer you. Ensure it is detailed and covers all grounds. In addition, ask what the lowest interest rate they are able to offer is and an explanation for the rate they have quoted you. If a rate or mortgage payment sounds too good to be true, be cautious. There may be hidden fees in the fine print that you are not being made aware of. A good lender makes sure you understand all the implications.
 
With all the different ways to obtain 2nd mortgages in Markham, it is wise to take the time to shop around and calculate costs to determine if it is indeed the best way to finance your needs. Meeting with a financial advisor or lender directly is ideal, as they will be able to help you navigate the various fees and application requirements, while investigating alternatives to taking out a second mortgage. 

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