Some people get jittery at the very mention of a second mortgage because, to them, it sounds like an emergency response a homeowner only pursues if they’re desperate. The very idea may conjure up the image of a person with no options left but to risk their home to pay for life’s necessities.
It may surprise you that second mortgages are more common than you think! Leveraging all the equity you’ve built up over months and years of paying for a mortgage can provide relief. There’s no asset more reliable than property, meaning homeowners can get access to borrowed funds at excellent rates they couldn’t get on their own.
Far from a disaster, second mortgages can provide hope to people in a tight financial spot. Let’s read more about how second mortgages work, so homeowners have another financial asset they can lean on in tough times.
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Saves Your Credit
In a world where credit scores can open up doors to borrowing badly needed money, people need to ensure their score is high or prevent it from dropping any way they can. However, bad credit can perpetuate itself, and getting out of that rhythm to improve your finances can pose psychological challenges.
People use a second mortgage for multiple reasons but consolidating multiple loans to improve their credit is a common one. Leading mortgage brokers can match you with the right second lender in Ontario and help you save $1,000 a month, more than $12,000 annually!
A bruised credit score can damage people’s credit and financial situation. Taking out a second mortgage lets homeowners tap into the equity they’ve built, so they can polish up their credit and potentially get bigger loans in the future.
Don’t neglect your credit score and let it drop any further. If yours is too low, don’t feel like there aren’t ways to get help! Leading mortgage brokers pride themselves on finding ways to work with people of all income, debt, and credit levels.
Cash for Renovations
Many people borrow against their equity to re-invest in their homes. A second mortgage can be an excellent way to free up cash for home improvement or emergency repairs.
You may be surprised to know how easy applying for a second mortgage can be and how quickly the funds get approved. Using your home as collateral signals that the loan is reliable since there’s hardly a more valuable form of collateral than property.
If you have a leak in your roof, or you simply want more space for a home office or a play area for the kids, consider using a second mortgage to pay for it. Tapping into your home’s equity to improve your home is a sensible approach because any borrowing costs get offset as your home rises in value.
If you do it right, you can actually make money by improving your home.
Sometimes we need cash for major investments and don’t always have a pile to draw on when an opportunity happens to come knocking. Many borrow against their home’s equity by taking out a second mortgage to free up the funds at a very competitive interest rate.
However, you want to be cautious and circumspect; the inability to make repayments can result in losing your home. While you’re legally free to use the borrowed funds however you want, try to avoid investing in crypto scams or other dubious get-rich-quick schemes.
What to Look for in a Brokerage
When picking a brokerage to help with your second mortgage, what do you look for? Industry leaders can help out anybody, no matter their level of income, credit, or debt.
Look for a company with ample experience to get you the best deal possible. Those with strong relationships with various lenders are best positioned to work with you. They’ll help you choose the right mortgage product, whether it’s a second mortgage, a HELOC, or a home equity loan.
After years of making mortgage payments, you’ve built up equity that shouldn’t go to waste. If you’re a homeowner in need of financial support to help pay for rising living costs or whatever else, consider taking out a second mortgage.