Obtaining A Bad Credit Second Mortgage In Toronto
While second mortgages may not be nearly as easy to get as a regular loan, it is good to be aware that you can find a 2nd mortgage if you happen to be in need of one. The reason this is possible is that those mortgage agents who make these riskier loans have financial portfolios that make it easier for them to absorb more risk than more traditional mortgage agents. Of course, this comes at the price of higher fees and interest rates, but at least you have the option.
A second mortgage is a secured loan that you take out against your home. However, if a foreclosure should happen, any proceeds will be put toward the 1st mortgage before any of it goes toward the 2nd mortgage. In theory, the only way you could fully pay off a second mortgage is by selling your home for twice as much as it’s worth, and that’s why they are so risky.
Generally speaking, the people who need to take out another mortgage on their home are those who couldn’t make the first mortgage work; meaning they tend to already have shaky credit. This is one of the reasons why a bad credit second mortgage can be more tricky to find. However, there are some things lenders will look for:
1. Equity. The more equity you have in your property, the better. It’s possible to get a second mortgage if you have a 80% or less first mortgage than the current value of your property.
2. Debt ratio. Different mortgage lender have very different rules, but the lower your debt is when compared to your yearly income, the more likely you will be able to obtain your mortgage.
3. Employment history. A mortgage lender will feel more confident in giving you a second mortgage if they are convinced that you will be able to pay it back.
There are many uses for a second mortgage. For example, if you don’t have the money for the typical 20% down on your new home, you may be able to use the loan to pay for the difference. However, these types of loans are most often used as a way to get money for other purposes. Sometimes the money may go for home improvements, but they can also be used to buy other things the you want.
Another thing to think about is that you can borrow more than the appraised value of your home. This is getting harder to do in today’s economy, but in some cases you can get a loan that’s equal to 125% of your home’s value. It will be easier to get that amount if your property is likely to increase in value, for whatever reason.
If you are having a difficult time finding a mortgage broker in Toronto to give you a bad credit second mortgage, then going online is a good idea. Not only will you be able to find all kinds of mortgage brokers willing to work with you, you will also be able to compare their mortgage terms and rates before deciding which one you want to get a mortgage from.
Contact us now at 289-401-0005 or click here.