Use a Toronto Second Mortgage Home Loan to Your Advantage.
Is a personal loan out of your budget to meet your extra financing need? If so, a “Second Mortgage” might be the solution. The trend of taking out second mortgages is fast catching-up among people in Toronto due to its ease of processing and copious other benefits. The best part is that you can use a Toronto second mortgage home loan to your advantage in a number of ways. Before discussing its benefits, let’s take a look at what it is.
What Is A Second Mortgage?
A second mortgage is an additional loan, subordinate to the primary loan taken against the same property. The term “second” implies that this loan doesn’t have priority on the property in case of default. Instead, the first mortgage has priority & this loan will be paid off prior to the second.
Advantages Of Second Mortgages
- One of the main advantages of taking out a second mortgage is that it allows you to access a large amount of money. As this type of mortgage is tied to the equity in your home, you’re likely to have access to a larger amount than you might be able to with a personal loan or credit card.
- The interest rates that come with second mortgages are lower than many other forms of financing. For instance, you might have to pay 5% or 6% for a 2nd mortgage vs. 20% on a credit card. The reason why lenders offer lower interest-rates on 2nd mortgages than on credit cards or unsecured loans is that they consider second mortgages safer since these loans are secured by the house.
- The fact that interest on the 2nd mortgage is tax-deductible is also one of the reasons that make it an attractive option for homeowners.
- A second mortgage can be easily processed if it is taken from the same lender, from whom you’ve taken your current home loan.
- If you are overwhelmed by your car loan, credit-card debt, or other high-interest debt; you can easily consolidate all these accounts & repay them using the money that you get from the second mortgage. In this scenario, you would pay back your small, high-interest loan with your new, large, low-interest 2nd mortgage loan. As a result, you’ll enjoy lower monthly loan installments, lower rate of interest, & lots of savings.
- You can take out a second mortgage to renovate your home. By doing so, you can improve the value of your house & gain more equity. Besides improving the value of your property, renovations also boost up its curb appeal.
- You can also take out a 2nd mortgage to get funding for big purchases, like a car, overseas family vacation, higher studies, etc.
Since taking a second mortgage means taking an additional loan, expect your monthly payment burden to increase. To decide if it is the right choice for you, it is also important that you take a look at your current financial situation, your expected disposable future income, & your financial goals.