The Things Canadians Do With a Second Mortgage

• January 18, 2017

A second mortgage in simple terms refers to a loan taken on a property that is already mortgaged. These kinds of loans have become more common in Canada these days. This may be attributed to the various benefits they have such as ease of access and simple application process, access to higher loan amounts and competitive interest rates. But one may wonder why someone might opt for a second mortgage, yet they are not yet done with the paying the first one. Well, it has been revealed that most Canadians opt for second mortgages for the following reasons-:

For investment purposes

Most of the Canadians who go for second mortgages usually do so for investment purposes. Some consider it as a quick source of funding for emergency investment opportunities which might not be around for along a time, while others use it to beef up their investment portfolios in various ventures. Others, still, use second mortgages to pay off smaller loans in more manageable installments.

Purchasing a second property

The other reason why Canadians go for second mortgages is to finance the payment of a vacation or an income property. For such purposes, the traditional banks might require up to 20% down payment for the purchase of a second property and to quickly do this, it is easy to use a property you already own to get a second mortgage and get the funds required to acquire the new property.

Second mortgage for renovations

A majority of Canadians also use second mortgages to carry out various renovations or repairs in their homes. For instance, the mortgage could be used to fix a leaking roof, bathroom and kitchen renovation and other kinds of constructions around the existing home.

Pay off high interest debts

Most Canadians also use second mortgages to pay off high interest debts. For instance, if you are paying 25% or 30% interest on your credit card balance, you can use a second mortgage to improve your finances. It will let you lower the interest payments which will in turn help you find your way out of debt in an easy and manageable manner. All you have to remember is to stop using those credit cards once they are fully paid.