With the help of the best mortgage brokers in Markham and Richmond Hill
Have you ever heard of someone “joke” about wanting to “take on a second mortgage” to pay for something super expensive, like classy designer shoes or a lot of clothes? If you’re not exactly sure what this expression means, read on. While neither clothes nor shoes can be used for a second mortgage, your home can definitely be considered as a highly important source of credit!
What is a second mortgage?
In simple terms, a second mortgage is a loan taken out to a home that already has a mortgage on it. You basically borrow money using your home as collateral. But since your primary mortgage lender is paid first, the second mortgage holder will mostly charge higher interest rates than your actual home loan.
What is the difference between first mortgage and second mortgage?
First mortgages are the loans used in the initial purchase of the home and second mortgages are taken on by a property owner to pay for other purchases by using the equity that has built up in the home.
The most common types of second mortgages are known as home equity loans. As the name implies, it is a closed-ended loan where a homeowner borrows a fixed amount and then pays it back over a period of time.
When should you use a second mortgage?
The most common uses for second mortgages are paying off high-interest debts, financing a home improvement, paying for a child’s college tuition, etc.
The best part? The interest rates on second mortgages are usually lower than the interest rates on any other type of loan!
So, what are you waiting for? Consider your future plans carefully and consult our team of second mortgage guidance experts in Markham and Richmond Hill- Ontario, right away!
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