Getting a Second Mortgage with Bad Credit
When compared to a regular loan, finding and getting a second mortgage in Brampton can be daunting, especially if you have bad credit. Mortgages agents help to make it easier for individuals with shaky credit caused by first mortgages.
Although second mortgages are a bit riskier, may come with higher fees and/or interest rates, there are mortgage brokers that have the financial experience and background to simplify the process. Thus, making it easier to absorb the risk. A typical mortgage agent may not necessarily have this ability.
Before deciding to take out a bad credit second mortgage on your home, you should be aware of current rates, risks involved, and what lenders are looking for, and then determine how to make your second mortgage work.
Current Mortgage Rates in Brampton
Variable Rate Mortgages in Brampton currently range between 2.20% and 2.35% APR, which aren’t bad. However, a fixed rate mortgage can start as low as 2.20% APR on a 3-year mortgage term or 2.35% APR on a 5-year mortgage term (on approved credit).
What Is a Second Mortgage & Understanding the Risks
If you didn’t do so well with your first mortgage, you really should familiarize yourself with what a second mortgage is and what it means. This way you can determine the best way to make it work for you the second time around.
You can take out a second mortgage but you should understand that a second mortgage is secured against your home. So, if your home goes into foreclosure, any money that is made off the sale of your home will be applied to your first mortgage first. Since it’s unlikely that you will sell your home for double the price, it’s also unlikely that these proceeds will pay off your second mortgage, which explains the risks involved in this mortgage type.
What Brampton Lenders Are Looking For with Bad Credit Second Mortgages?
Have you experienced difficulties in paying your first mortgage? Don’t fear, a second mortgage can help you to turn things around and do it right the second time. Even with bad credit, it’s possible to get a second mortgage. It may be a little bit tricky, but it’s not impossible. You should know what lenders will be looking for, so that you are prepared when the time comes:
Your Income-to-Debt Ratio
When lenders are collecting and reviewing your information to determine whether they will lend to you for your second mortgage, one of the things they look really closely at is your income-to-debt ratio. Simply, this means that look at your total amount of debt and your total amount of income, and then compare the two. If you make more money than you pay out in debt, your chances of getting the loan will be greater.
Your home equity on your first mortgage can also help you out with a bad credit second mortgage. You can utilize up to 95% (with one of our lender) of your home equity (normally 80%) to get your second mortgage loan. Keep in mind that this will be less the outstanding amount owed on your first mortgage.
Since lenders want to be assured that you will have the ability to pay back the second mortgage, therefore they will also examine your work history. As long as you have an income that you and they can depend on, this will increase and/or improve your chances of getting the second loan.
Are you looking for a good credit or bad credit second mortgage in Brampton? Want to compare rates and terms before making a decision? AKAL Mortgages can help. Call us at 416.621.1300 today to make an appointment to get advice and information that you can trust.
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