What is a second mortgage?
A second mortgage is simply another mortgage on your property—a loan secured against the property. The term "second" indicates that the loan does not have priority on your property in case you default. Instead, your first mortgage has priority and would be paid before any funds go toward the second mortgage.
Common Uses of Second Mortgages
What do people use second mortgage funds for? Some of the uses are listed here:
Reasons to Obtain a Second Mortgage
A second mortgage is often the most economical way to raise extra cash. If you have a low rate on your first mortgage, it makes no sense to incur a large penalty to pay off that mortgage. We can raise additional funds up to 85% loan to value. For example, if your property value is $500,000 and your first mortgage balance is $350,000, you would be at 85% loan to value if you obtain a second mortgage for $50,000.
Where to Find a Second Mortgage
You should first try to obtain a second mortgage from your first mortgage lender if that lender offers bank rates. If that lender won't help you, a private mortgage may be the solution. Many second mortgages in British Columbia are provided by private lenders, as few institutional lenders are presently interested in second mortgages.
Second Mortgage Terms
Most second mortgages are written for one year to give you the flexibility to combine your mortgages within a short period of time. Cost of borrowing varies widely depending on equity, credit, type of property and fees charged by the lender and broker. The rate you are quoted is not always a good indication of the cost of borrowing.
Rala Investments Ltd
1200 Lynn Valley Road Suite #301
North Vancouver, BC, V7J 2A2
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