Best Alternatives to Second Mortgages

• May 15, 2017

Not everyone is able to access a second mortgage, and there are certain people who don’t fancy the idea of going for a second mortgage. But this should not imply that purchasing a second home is impossible for such people. There are a number of alternatives to second mortgages worth considering, listed below:

Equity release

Equity release is one of the common alternatives to second mortgages. With an equity release, you maximize the available mortgage on one property to make it possible for a second property to be bought in cash. If the additional mortgage was to be taken from a different lender, then this would essentially be considered a second mortgage, but since it is being taken on the same property, most of the complications usually witnessed with second mortgages, such as the need to prove adequate rental income, will be avoided.

Personal loans

Both secured and unsecured personal loans can also be good alternatives to second mortgages. Rather than going directly for a second mortgage, it is possible to approach a bank or private lenders for personal loans and so long as you can meet their various terms and conditions, you can get the money you need to purchase the house in cash or use the money for other purposes.

Cash Advances

The most common case whereby Canadians opt for 2^nd mortgages, is when they have an urgent need to finance a short term emergency situation that requires unexpected amount of cash. A cash advance would be ideal in such a situation, but you will have to contend with the higher interest rates as well as the strict terms of payment. With cash advances, you may or may not need to have collateral, and this will largely depend on your chosen lender.