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The Skinny on Second Mortgages for Barrie Homeowners

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Today’s high cost of living has made climbing out of debt more difficult. One of the main reasons Canadians take out a second mortgage is to pay off credit card debt. A second mortgage is an additional loan taken out on a property that already has an existing mortgage. Second mortgages in Barrie allow homeowners to take advantage of the equity their property has accumulated to access large sums of money that they may not otherwise qualify for.
 
But will it help to clear those debts? For some it will but it may create more problems for others. Before committing to a second mortgage, consider these factors.
 

Do you Have Enough Home Equity?

 
Equity is calculated by taking the total value of a property minus how much Is still owed on it, not how much has already been paid towards the mortgage. The amount of available equity can then be used for paying off creditors, lines of credit or debt consolidation.
 
When lenders are considering an application for a second mortgage, they will look for:
  • Available equity – what is left over after the first mortgage or other debts secured against the home;
  • Debt-to-income ratio – the ability to repay the mortgage
  • Credit score – influences what amount you will be approved for and what the rate will be

Are the Payments Affordable?

 
You will need to decide if taking out a second mortgage will solve your cash flow problems. The second mortgage will subordinate to another loan against the same property, and in the event of a forced sale, the first mortgage will be paid off before the second.
 
Since second mortgages are secured by your property, if you stop making payments, your home is at risk of foreclosure.
 

Work with a Private Mortgage Lender in Barrie

 

Many Canadians might think of private lenders as a last-resort option if they can’t secure financing anywhere else. However, private funds are gaining traction as a financing option due to the new mortgage rules set by the federal government and the continued post-financial crisis caution being exercised by institutional lenders. According to the Canadian Association of Accredited Mortgage Professionals (CAAMP), many Canadians view mortgage professionals, such as private mortgage lenders, as valuable consultants that can help them understand their options.

 

A lender in Barrie is particularly valuable to second mortgage seekers whose financial circumstances are not as straightforward as traditional lenders like banks may prefer. A private mortgage lender will:

  • Present the most competitive rates;
  • Provide flexibility in financing choices;
  • Often look past credit score and debt ratios;
  • Have shorter terms;
  • Offer fast closings.
Second mortgages in Barrie have very manageable interest rates and are one of the best ways to borrow against available equity for homeowners to get a handle on debts.

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