2nd Mortgages Give Ajax Homeowners Financial Flexibility

Owning a home is a significant investment, but it doesn’t have to be all that puts a stranglehold on your disposable income. For many homeowners, your home is your most important financial asset. Most homeowners become familiar with mortgages the first time they purchase their homes. Your home acts as collateral, allowing you to receive funds (often times used to purchase the home), which must be repaid in a predetermined set of payments over a specified period of time. A home may have several mortgages on it. The mortgage rank is determined by the date on which the homeowner borrowed the money, so the mortgage used to purchase your home is called your first mortgage. As homeowners begin to make payments, they start building equity on their homes. This equity can be leveraged against the home for an additional loan. This refinancing of the home is called a home equity line of credit or second mortgage. Second mortgages give Ajax homeowners the financial flexibility to finance home renovations and large-scale expenses, and to consolidate their debt.

How Does It Work?

Home equity lines of credit are variable interest rate loans, meaning that the interest rate will fluctuate over the term of the loan. The amount available to be borrowed will depend on the amount of equity you have in your home. Some lenders are willing to provide financing for up to 90% of the value of your home. The amount of equity that you have in your home is the value of the property less the debts you have borrowed against it. Many homeowners use second mortgages to finance home renovation projects as a way to increase the value of their homes.

Consolidating Debt

Since 2nd mortgages generally have a lower interest rate than credit cards and other forms of borrowing, homeowners have used them as a way of consolidating their debts under one simple monthly payment. Some credit cards charge upwards of 20% interest for borrowing, so refinancing to consolidate your debts can make a lot of sense and save you money in the long run. The interest you pay on your second mortgage is also tax deductible. Homeowners have long taken advantage of the interest rate benefits involved with refinancing their homes to consolidate their debts and get out of debt quicker. By cutting down on the interest you pay monthly, you’ll have more money in your pockets in the short term while saving money in the long term as well.
For many homeowners in Ajax, 2nd mortgages are a great financing alternative that can help you manage your debts, fund home renovations, or simply get cash into your hands quickly. Homeowners have used second mortgages to send their children to school, invest in their home businesses, and more. Though the money can be used to fund nearly anything, it should be used responsibly. Failure to make the mortgage payments could result in the foreclosure of your home. It’s important to use the additional financial freedom with caution and allocate your money properly. A mortgage advisor can help identify if a second mortgage is the right financing solution for your particular situation. 


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