A second mortgage is a fairly common option among homeowners in North America, and in Toronto is no exception. Some homeowners in the Toronto are finding that a second mortgage can help make their monthly cost of living and housing bills more manageable. If you are interested in applying for a second mortgage in Toronto or may be interested in pursuing a second mortgage in the future, take a look at the following 4 things you have to know about obtaining a second mortgage and about mortgage lenders—in the Toronto area.
Most People choose a Traditional Lender for a Second Mortgage
Most people who seek a second mortgage in Toronto look to popular lenders, such as the established banks and credit unions, who typically have years of experience in dealing with second mortgages for homes and otherwise. These experienced lenders offer longer payback types, multiple types of mortgage loans, and generally competitive interest rates.
Private Lenders are getting Bigger in Toronto
The mortgage game isn’t just for traditional lenders like banks, credit unions and other financial institutions anymore. The rise of private lenders, which includes both individuals as well as organizations, can be attributed to a rise in people who need to apply for second mortgages but aren’t likely to be approved by a traditional lender such as a bank. The reason for this may be related to their credit score, current financial situation, or the nature of why they wanted a second mortgage. Private lenders often have much more lenient application terms, which come with a shorter payback time and higher interest rates.
They aren’t just for Houses
It’s true that most people in Toronto take out second mortgages to help finance their home, or more specifically their first mortgage. But housing isn’t the only reason to take out a second mortgage. In Toronto, you can take out a second mortgage to gain funds for many different things, including but not limited to:
- Home renovations
- Paying for education costs
- Buying a car
- Paying for a wedding or other special event
- Paying off bills
- And much more
You should note, however, that just because you can technically take out a second mortgage to pay off anything doesn’t mean that lenders will give you the money for anything. Lenders in Toronto may not lend you the money if they feel it is a risky investment on their part. For example, if you have a history of missing mortgage payments and are attempting to take out a second mortgage in order to start a new business that you just dreamed up the month before, it will likely be considered a risky venture. On the other hand, if you have a great credit score and financial history and present the institution with a solid, well-done business and financial plan for your start-up business that is a year in the making, you are more likely to be approved.
There are many different available lenders for a second mortgage in Toronto, ranging from the ‘big names’ such as established banks, credit unions and other financial institutions to individual and private lenders, who can range from individual people to unique organizations.