Today education costs pretty a lot of money this is why parents of most kids today apply for second mortgages in order to give their beloved ones better ticket in life. The general explanation of a second mortgage is that it is an additional loan on your property. With no doubt there are a lot of things that you need to consider before applying for second mortgages and not just crush into them. And in order to begin this process, read about the most essential information that every borrower should know about second mortgages.
Second Mortgages Types
Experts distinguish two main types of second mortgages. The first one is called home equity loan and the second one is line of credit. The former loan in fact pays you a lump sum amount of money when you get the loan approval. This type of second mortgage in Toronto you will have to repay in installments over the life of your mortgage. The second type (a line of credit) has the similar description of working mechanism. You get approved for some credit line. In this case you are able to withdraw money up to the approved credit line. The monthly payments at both types will depend on your outstanding balance.
Second Mortgage Eligibility
The general eligibility of a person to get a second mortgage depends on some factors. Most important ones include whether you will need any sufficient equity on your property not including the amount on the first mortgage. In general you are considered for a second mortgage amount basing only on the remaining equity.
Second mortgage application process is very similar to the first mortgage. The main points include credit history check so make sure that your history is in good condition beforehand. You will also need to provide some documents which will support your employment, all assets and tax history, these will be especially important if you were to be applying for one of these mortgages for physicians, as an example. In general the waiting time for approval is from 2 to 6 weeks.
Second Mortgage Advantages
The main advantage of second mortgages is that you get tax deductible interest rate. Moreover, the interest rate on a second or bad credit mortgage in Toronto is significantly lower if compared to rate that is charged by a high interest credit card. As you see though it is a risky undertaking second mortgages undoubtedly have lots of great advantages.
The main idea when applying for second mortgages is to weight all pros and cons before you begin the application process. All Canadian experts say that second mortgage is a perfect financial tool if you use it carefully. Professionals advise to consider thoughtfully applying for a second mortgage if the only thing you have is additional equity on the property. They advise to apply for second mortgages only in case it really justifies your financial goals. If you are not sure that you will be able to handle repayment process till the very end of your second mortgage, you should consult with a financial experts before taking such decisive steps in order to make sure that you are not jeopardizing your financial stability.