3 Things to Remember When Getting a 2nd Mortgage
When you purchased your home, you made an investment so you would build up equity rather than having nothing to show for monthly rent payments on an apartment. Then the times comes where you realize that your debts have grown and that you need to access that equity by getting a second mortgage so you can handle your debts. When it comes to getting 2nd mortgages in Edmonton, there are three things that you need to keep in mind throughout the process.
First Things First, Interest Rates Might Be Higher
2nd mortgages are taken out separate from your primary mortgage. Since it is a separate loan, if anything were to happen, it would be paid only after the first mortgage is covered. This means that the lender is at higher risk if you default and the home goes into foreclosure. To make up for that risk, interest rates are higher than on principal mortgages. By working with us at BMC Mortgage & Investments, we can help you with your 2nd mortgage because we are private lenders and have more options.
Keeping an Eye Out for Charges and Fees
There are many fees involved in 2nd mortgages, some of which include appraisal fees, legal charges and application costs. To secure a 2nd mortgage there is a lot of additional paperwork that must be filed and these costs need to be covered. They are usually additional costs added onto securing your loan. The appraisal must be done to ensure you do have enough equity in the home in case of default. Make sure you find out what fees have to come out of pocket before closing on the mortgage and what fees or charges may be rolled into your 2nd mortgage.
Timing Really is Everything
If you try to take a 2nd mortgage out on your home soon after making the original purchase, you will not likely have enough equity to secure the loan. The amount you are able to borrow will depend on the value left in your home if the principal mortgage had to be paid out. For people who have purchased a home that has equity right away, you should still consider the timing and ensure you can handle all of the costs of home ownership plus the monthly payment for 2nd mortgages. With the cost of living in Edmonton, it is easy to get in over your head financially if you aren't careful.
At BMC Mortgage & Investments, we have been helping people in Edmonton secure 2nd mortgages without out-of-pocket fees for over 40 years. Contact us today to find out how we can make your home equity work for you as a 2nd mortgage.