If you’ve been wondering whether or not a second mortgage is right for you, Dhugga Mortgages wants to help you understand exactly how a second mortgage works so you can decide if it’s right for you.
A second mortgage is not very different from your first mortgage and works the same way. After you apply and get approved, you will receive a one-time payment for the loan based on the set amount that was agreed upon. The loan will be for a specific term during which a set amount must be paid monthly. The difference will be the interest rate fees which are normally higher for a second mortgage, so keep that in mind. If you are unable to make your payments, it can lead to you losing your home, which is the same consequence that a first mortgage carries.
To qualify for a second mortgage, you will need to have your home appraised and the amount you receive will be based on the equity in your home. You can start the application process by going to your bank or a private lending company to see if you will get approval.
Many people take out a second mortgage to pay off their debts and while it can help, you need to be careful and understand all of the factors associated with this loan. You can consolidate your debt and use the loan to help pay it off but if you don’t address the reasons you went into debt in the first place you may find yourself back in the same situation. If you have trouble with credit cards, a second mortgage may not be a solution, so be careful when making this decision to avoid potentially losing your home.
Another reason people take out a second mortgage is to use the equity to complete home renovations and improvements. While you can cash out the equity, remember that you’ve agreed to a loan that comes with a higher interest rate, so you have to think hard to determine if that is what you really want and if you can really handle the payments. Be realistic about your situation so that you don’t make a decision you’ll come to regret.
When the time comes to making a financial decision of this magnitude, it’s a good idea to consult a professional who can provide you with the proper information and advice to help with your choice. If you want to discuss whether or not a second mortgage is right for you, Dhugga Mortgages can help! If you’re in Brampton and want a private mortgage broker to help you with your refinancing inquiries, give them a call today!