Depending in which part of the country you live in you may find yourself with quite a bit of equity built up in your home. If you reside in the Toronto, Ontario area where values have risen substantially and the equity is sitting there, you may want to consider taking out a second mortgage. You can use the money for home renovations, a vacation home or paying for an education. Read on to find information about getting one as well as advantages and disadvantages to getting one.
The Second Mortgage
The second mortgage takes a subordinate position to your first mortgage but there are still benefits, which means you can get tax free money for whatever you want. You can take the second Mortgage funds out as a lump sum or get a line of credit to draw out the money as needed. First you need to determine the equity in your home, you can get a rough idea by subtracting the current mortgage form the market value. Mortgage lenders allow up to 90% of your equity so potentially you could see quite a bit of money depending on the value of your home.
Disadvantages
A second mortgage can be an excellent way to get some cash but beware of the pitfalls for one thing the lender is going to have the deed to your home. If for some reason you fall behind on the payments the lender has the right to your property just the same as your first mortgage. While using the money for home improvements or repairs it’s not advisable to use the money lightly or for frivolous purposes. Repairing a roof, educational expenses or consolidating higher interest loans or debt would be a better way to put the equity in your home to work.
If you are looking for a Toronto Mortgage Broker and need more information on a second mortgage, contact Rakhi Madan Mortgage Agent.
