The GTA housing market has been red hot for a few years now and homes have increased so much in value that many homeowners are finding themselves house rich, but cash poor. This is because Canadian families are carrying more debt than ever and most of their worth is tied up in their principal residences.
When it comes to financing for a variety of things, one option to consider is a second mortgage. With mortgage rates at all-time lows, many homeowners don’t want to touch their first mortgages or terms and look towards secondary financing when thinking about the simplest ways to unlock equity. Home equity is an excellent tool for unlocking cash in your home to finance big ticket endeavours: home renovations, your child’s schooling, debt consolidation, purchasing other property and more.
There are different ways to unlock equity in your home:
- Conventional second mortgage. A conventional second mortgage allows you to access up to 80% of the value of your home. This typically takes a couple of weeks to arrange and close, and there are closing costs involved: lawyer, broker, appraisal and other fees. This means several different appointments, and all homeowners have to qualify and sign on the mortgage.
- Unsecured second mortgage. An unsecured second mortgage allows you to access up to 50% of the value of your home. Compared to a conventional second mortgage, this process is much faster. It can close in 1-2 days, and there are no closing costs. Furthermore, only one homeowner has to sign, often only a single appointment is required, and there is no mortgage registered on the title to the home.
- A combination of both. Sometimes lenders that extend unsecured second mortgages will privately fund a secured conventional second mortgage at significantly reduced closing costs.
A second mortgage offers many big benefits – you can typically access more than you would be able to with a regular personal loan and you can amortize it like a loan. Additionally, second mortgages will often be open or have very short terms so you can pay them off easily and quickly.
At Prudent Financial, we appreciate how tough it can be to find yourself sitting with a really valuable house but what feels like no money to do the things you want to do. If this is where you’ve found yourself, we can help with second mortgage financing that doesn’t take long to arrange or cost you an arm and a leg in closing costs.
For more information please contact us today at 1-888-852-7647.