As a Brampton homeowner, you have worked hard over the years to pay down your mortgage and in the process, you have built up equity in your home. This is equity that you can borrow against using a second mortgage.
What is a second mortgage?
A second mortgage is simply a loan that is taken out against your home equity. Your home equity is the value of your home minus what you still have left owing on it. When you take out a second mortgage, you do not have to break your first mortgage. Usually the interest rate on a second mortgage is slightly higher than that of your first mortgage but this type of loan is also usually short term as well – so it can be an inexpensive way to borrow money when you need it.
Why would one need a second mortgage?
Homeowners in Brampton use second mortgages for all sorts of purposes from consolidating debt, to getting the cash they need to start a business or to finance a home renovation. It is very cost effective and interest rates are considerably lower than they are for other types of loans such as credit cards.
And since getting a second mortgage does not require you to break your first mortgage, you don’t have to worry about paying a financial penalty either.
Is it better to get a second mortgage in Brampton or to refinance?
That really depends on how soon your mortgage is coming due for renewal. The sooner your renewal date is, the more sense it makes to refinance since the interest rate will be a little lower. If your renewal date is still some time off, it makes more sense to get a second mortgage in order to avoid a hefty financial penalty. To know for sure which option makes the most sense for you, you should consult with your mortgage agent and let them run some calculations for you.
Are there any drawbacks to getting a second mortgage?
When you get a second mortgage, you do need to remember that you are borrowing against your home and you should have a plan in place to make sure that you can make the payments. Otherwise, you could risk forfeiting your home.
How do I know if a second mortgage is right for me?
The best way to know if a second mortgage is right for you, is consult with a qualified mortgage agent. Contact us today to speak with one of our brokers in Brampton.
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