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What Are the Costs Associated with Getting Second Mortgages in Thornhill?

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What Are the Costs Associated with Getting Second Mortgages in Thornhill

 
With the market value of homes on the rise, applying for second mortgages in Thornhill could be a well-timed financial decision. This upper GTA neighbourhood continues to be met with strong demand, which could mean that your home’s value has risen quite a bit since you took out your first mortgage.
 
A second mortgage is a secondary loan against your home’s equity. Equity is the difference between your home’s market value and the amount you currently owe on your first mortgage. For those looking to access a large lump sum of cash at a lower interest rate compared to traditional loans, a second mortgage could be the solution. However, before rushing into any major decision, it is necessary that you work out your finances and ensure that you are able to afford the costs associated with obtaining a second mortgage.
 
So, what are the different costs that you should account for when budgeting your repayment plan?
 

1. Your First Mortgage & Existing Expenses

 
In addition to making payments on a second mortgage, you will need to continue making payments on your first mortgage. Although a second mortgage can be a great way to consolidate debt from various lenders into one easy payment, you will need to account for existing expenses to ensure that you have budgeted accordingly. Monthly expenses can include car insurance, gas, groceries, utilities, entertainment and medical bills.
 

2. Appraisal Fees

 
Since the amount you are able to borrow is dependent on the equity you have built up in your home, a professional appraisal will be needed when applying for a second mortgage. An appraiser will assess the value of your home on the current market given its original purchase price and any renovations that may have gone into it. There are a few appraisal methods used. One method is called the sales comparison approach, where an appraiser will compare a few recently sold properties in your area against yours. They will look for details such as number of bedrooms and bathrooms, finishes, age of the home and size to get a sense of your home’s market value in its current condition.
 

3. Title Search or Insurance

 
A title search is conducted to ensure that there is nothing that could prevent you from legally owning the property. Although it may seem strange to conduct a title search on a property you already own, it is necessary to involve a real estate lawyer whenever you are dealing with property. Title insurance is not mandatory for all lenders, but it protects you against any losses (e.g. fraud or forgery) related to the title of your home.
 

4. Broker Fees

 
If you are going through a mortgage broker or private lender for your second mortgage, you should inquire about any service or application fees they may have. It could be a simple fee or a percentage of the loan. A good mortgage lender will be very clear and upfront about any hidden costs to ensure that you are fully briefed on all aspects of the contract.
 
When looking for second mortgages in Thornhill, it is vital that you account for all the costs associated and that you make certain that you are able to make payments on time and in full. During your initial consultation with prospective lenders, be certain they have mentioned all costs upfront and ask for clarification on any details that you are not certain about.

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