If you have debt you would like to consolidate into
your mortgage, mortgage lenders in Kitchener can help you take out a second
mortgage on your home. Along with consolidating debt, the money from second
mortgages can be used for covering home renovation costs, paying for children’s
education, repaying mortgage and tax arrears, or just for having disposable
cash on hand.
Put simply, a second mortgage is a loan against the equity
in your Kitchener home. The equity value available in your home is determined
by the current appraised value of your home minus the amount still owed on your
first mortgage. There are two types of these mortgages, both secured by your
home. The first type of second mortgage is a home equity line of credit, which
is much like a credit card with a revolving balance. You can borrow as much as
you need at a time from your home equity line of credit. Interest is paid as
you borrow funds. The second type of second mortgage is a home equity loan.
This mortgage comes with a lump sum of money with fixed interest rates and a
repayment schedule set up similar to a traditional mortgage. As with any type
of financial product, a second mortgage can offer a homeowner great benefits,
but it can come attached with some risks as well.
What Are Some Benefits of Second Mortgages?
- Although interest rates on second mortgages tend
to be higher than interest rates on first mortgages, the rates are still
generally lower on second mortgages than on personal loans or credit cards. A
second mortgage is considered safer by mortgage lenders in Kitchener since it
is secured by your house.
- Since second mortgages are based on the amount
of equity built up in the home, you may have access to a large pool of money as
long as you have equity in your home and a good credit score. Credit cards and
personal loans are typically smaller and more limited in scope.
- The money you get from second mortgages can be
used for any purpose you wish, such as home improvements, children’s education
costs, debt consolidation, and disposable cash on hand, or for any other reason
What Are Some Disadvantages of Second
- Since second mortgages are secured by your home,
you risk losing your house if you are unable to make payments on the loan. The
risk of foreclosure may not exist with other forms of debt.
- Second mortgages add debt to your property. If
you have to sell your home in Kitchener and the market value of the property
has dropped for some reason, the proceeds from the sale may not cover your
- There are fees associated with securing a second
mortgage. You will have to have your home appraised and pay for closing costs
again. Mortgage lenders in Kitchener will review all associated fees and help
you decide if a second mortgage is the right option for you.
the number of pros and cons involved, taking out a second mortgage can be a
complicated decision. It is best to speak with experienced mortgage lenders in
Kitchener who can help you sort through your options to make the decision that
will be the most beneficial to you.