Thinking About A Second Mortgage? Here is What You Should Know

• August 12, 2017

Second mortgages have become so popular in recent years in the Canadian mortgage market. However, not so many people have a good understanding of them, and have always been skeptical about trying them out. Here is all you need to know about these mortgages, should you consider going for one:

They are just like any other loan

Second mortgages are just like any other loan, with the added advantage of being an awesome source of easy and fast cash. You can use them at times of financial emergencies to get quick funding, or you can use them to finance your other financial obligations such as paying debts, home renovations, buying a new car or even going on a much needed vacation.

They come with a wide range of benefits

The various benefits of second mortgages offer more reasons, which have led to their popularity across the country. The first and most important of them all, is that the loan is secured against your home, and this lowers the interest rate. Secondly, the risks in second mortgages are considerably lower compared to other forms of loans.

Private lenders dominate the second mortgage industry

Most of the second mortgage lenders in the country tend to be private lenders. This is perhaps because the banks, and other main stream lending institutions are afraid of a risky second mortgage loan, because the loan will become a second priority in the event that a borrower defaults on the payment. This means that the lender of the first mortgage will recover its money first, before the lender of the second mortgage can be considered.

Second mortgage to buy a car

It is a fact that home loans are cheaper compared to car loans. A second mortgage, is thus considered by many individuals, as a favorable source of alternative funding for individuals who need to buy cars but aren’t thrilled by expensive car loan rates.