There are several advantages to buying a property— you can create a dream home as you have complete freedom to renovate or remodel it. You can also build up equity in your home in a number of ways, like extra payments, increasing your payments.
The biggest advantage is you can leverage your home equity and access it by getting a second mortgage. You can use this money by paying for your children’s education, remodelling a bathroom or kitchen, or fixing your credit.
Canadian homeowners with bad credit usually tap into the equity of their homes to help them fix their credit or stop foreclosure.
How Second Mortgages Work
A second mortgage is a type of loan that is similar to your first mortgage. It’s an additional loan with your home as the collateral. Think of it as a second loan separate from the existing first mortgage. As you are building equity, the amount of money you can borrow for your second mortgage can also increase. Most lenders would allow homeowners to borrow up to 80% of their equity.
When you decide to get a HELOC or a home equity line of credit, you will get a lump sum of money from your equity, and you will be paying this on top of your first mortgage. One of the good things about getting a second mortgage is you can only make payments on the interest, which means that you have lower monthly payments.
Getting a second mortgage can be beneficial for you, especially when you’re using it to get home renovations or for debt consolidation.
Just remember, though, your home is the collateral, so ensure that you can also repay this loan.
How Can a Second Mortgage Help Me Fix My Credit?
Several Canadians struggle with paying over their credit card debt or auto loan. It can be difficult to settle huge bills, especially when you don’t have the resources to pay them off. But there is a way to finally settle your bill payments and then fix your credit in the process.
You can do this by getting a second mortgage on your existing residence. By consolidating your debt, you don’t have to think about the multiple payments you have to make every month; you can make one affordable payment for them. You can settle all of your outstanding bills with the money from your second mortgage and then settle the latter with one affordable monthly payment.
It can reduce your debt payments, and it reduces the stress involved in thinking about the bills that you have to pay every month. At least you only have to think about paying for your second mortgage — no more huge auto loans or credit card bills to pay.
When you pay off your loans or credit card debts, you are gradually fixing your credit. You are trying to gain control of your life again. Debt consolidation through a second mortgage can help you improve your credit score.
Also, keep in mind that you can use a second mortgage to help you stop foreclosure. We’re not always certain about our financial status; there may be times when it’s hard to make payments to our mortgages. If you are facing foreclosure because of this, remember that you can tap into your home’s equity, use the money to pay the first mortgage, and stop foreclosure.
What if I have bad credit? How will I get approved for a second mortgage?
Lenders often use the loan-to-value ratio to help them approve loans. When it’s higher, the loan is considered a higher risk. Some financial institutions, especially banks, may not even approve higher-risk loans. Banks would prefer to work with Canadian homeowners who have good credit. There are several options available that can help you get things under control.
Some lenders are willing to help out homeowners with their 2nd mortgages. The key is in finding these types of lenders. Mortgage Brokers Network can help you with this.
Although you have bad credit, you can still get approval for a 2nd mortgage by working with a private lender. You need us to help you find a lender suitable to your needs.
How it works:
If you have bad credit, your option is to use a private mortgage to help you obtain a second loan. Thankfully, this type of lender is not as strict as banks. They don’t really look at your credit score before they give you approval for a second mortgage. They do, however, check the marketability of your home and how much equity you have built up for your home.
It’s easy to get a second mortgage through a private lender, especially when your home is in a good location. Your mortgage broker will be able to find a suitable lender to meet your needs.
Private mortgages assess the potential investment of your home and not your credit history. They can help you acquire a second mortgage if you have equity built up in your home. But you need a professional to help you find the best private lender.
How Mortgage Brokers Network Can Help
Do you require assistance with a second mortgage? Our team is committed to helping our Canadian homeowners acquire financing for their homes and get second mortgages. We are familiar with how this works as our team has been in the business for several years. We have worked with several homeowners in the past. Let us know why you need a second mortgage, and Mortgage Brokers Network can help you obtain it.
We can get you an approval asap so long as you can provide us with the documentation that we need. Remember, we’re just a phone call away if you have any questions about getting a second mortgage loan. Reach out to us so we can assist you the best way we can.