A Second Mortgage? Maybe the answer.

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Take another look, it could be the answer you're looking for

In the past, second mortgages were associated with high rates and restrictive terms. Only those really in debt need a second mortgage – right? Not necessarily. There are certain market forces that have created renewed interest in second mortgages and are encouraging some homeowners to take another look.

Consider homeowners who plan to move to a newer or larger house and need a bigger mortgage. Chances are they obtained their first mortgage during the last few years when rates were at historically low levels. Now as they move to their new home, they want to port that mortgage because it’s at a great rate. A second mortgage may be the ideal product that allows them to save that rate.

Let’s also consider the first time homebuyer. Many first time buyers need more than the 75% of the home’s value they can get from a conventional first mortgage. The typical route they take is a high ratio mortgage in which the mortgage insurance premiums are amortized over the life of the mortgage, even if they are able to pay off the amount over 75% quicker, or the value of their home rises significantly over that 75% loan to value ratio. They may be better off choosing a conventional mortgage, while securing a second mortgage to cover the additional financing that can then be paid off as quickly as they want.

Debt consolidation is becoming an increasingly common reason for Canadians to look at second mortgages. Household debt is increasing, sometimes growing faster than personal income. The selfemployed with escalating tax liabilities and heavy credit card users are potential candidates for a consolidation product like a second mortgage. And with student loans on the rise, some Canadians want to be able to help their children while they are still in school so they don’t have to be burdened with large student loans upon graduation.

How about home improvements, a dream vacation or any other reason homeowners want to access some of the equity in their homes?

With a more competitive lending landscape taking shape in Canada, homeowners are able to get a variable rate second mortgage product of up to $100,000 to meet their needs at very competitive rates and terms, which can then be paid off in a manner that meets their needs. They can bypass mortgage insurance and use a first and second mortgage combination based on lending ratios that will make it easier for them to qualify for the mortgage they want.