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First & Second Residential Mortgage Solutions

Owning a home is an ongoing commitment; new responsibilities and issues can arise at any time. A 2nd residential mortgage can help you to fund additional expenses and other financial needs as long as you have equity on your home.

A second mortgage is a secured loan taken against a property that already has a mortgage. If your first mortgage leaves an equity gap, then you may qualify for a 2nd residential mortgage.

There are several reasons why a homeowner may consider getting a 2nd residential mortgage, such as:

  • Difficulty in getting approved for a personal loan (secure or unsecured), perhaps due to self-employment
  • Higher interest on the remaining balance when renewing your mortgage, perhaps due to a lower credit rating compared to when you borrowed your first mortgage, such that the extra cost is comparable to borrowing some more
  • The need for a cheaper option if breaking your mortgage midterm attracts a high penalty

A second mortgage poses a lower risk to the lender because your home acts as the collateral. A second mortgage has a higher interest rate than a first mortgage.

Comprehensive Services to Suit Your Needs

Our Northwood Mortgage™ Agents and Brokers can help you navigate the process and settle on the right type of second mortgage for your needs. The common options for second mortgages are:

  • Home equity loan – Comes in the form of a single lump sum that you’re required to repay through fixed monthly payments for a specific period of time. A home equity loan is ideal for homeowners who know the exact amount of money they need and would prefer to receive it at once.
  • Home Equity Line Of Credit (HELOC) – Gives you access to funds in a similar way to credit cards, such that you can borrow any amount you need, provided it’s within the set credit limit.

At Northwood Mortgage, we take the time to listen to your needs and look at the whole picture to approve your first mortgage. This includes situations that fall outside traditional lending categories and include:

  • Self-employed
  • Non-income verifiers
  • Credit issues
  • Financial distress situations
  • New immigrants

First & Second Residential Mortgage-Things to Consider

A second mortgage depends on the value of your home’s equity, determined by subtracting your mortgage balance from the current value of the home. If your home is worth $300,000 but owes $140,000 on your mortgage, you have $160,000 in home equity.

Depending on the requirements of the lender and your credit score, you may be allowed to borrow up to 85% of your current home equity.

Most lenders have the following requirements when applying for a second residential mortgage:

  • A certain minimum percentage of equity in your home

Consult your local home loan expert. After finding an option that might be suitable for your needs, consider visiting Northwood Mortgage for consultation. Our experts will answer any questions you may have and ensure that you’re making the right decision.

Why Choose Northwood Mortgage?

We recognize that each one of our clients has individual needs, and our products and services reflect this. Whether you are taking on your first or second mortgage, Northwood Mortgage offers a number of services to help you:

  • Consolidate your debts to improve cash flow;
  • Turn your home equity into cash when you need it most (home repairs and renovations, education financing, special events like vacations and weddings);
  • Earn a return on your home equity through investments.

We aim to provide you with a high level of tangible savings. We do this by developing well-established relationships with many of Canada’s most stable and respected Financial Service companies. This gives you access to an extensive and professional range of products and services that include:

  • Prime mortgages well below posted rates;
  • Construction and bridge financing;
  • Second and third mortgages;
  • Financing, up to 95% on a purchase of under $1,000,000

To learn more about how Northwood Mortgage Ltd. can help you, contact us at info@northwoodmortgage.com, 416-969-8130 or toll free1-888-492-3690.

FAQs

  • How is a Home Equity Line Of Credit (HELOC) different from a home equity loan when considering a second residential mortgage?

    A home equity line of credit (HELOC) is a secured form of credit. The lender uses your home as a guarantee that you'll pay back the money you borrow.

    Home equity lines of credit are revolving credit. You can borrow money, pay it back, and borrow it again, up to a maximum credit limit.

    Types of home equity lines of credit

    There are two main types of home equity lines of credit: one that's combined with a mortgage, and one that's a stand-alone product.

    Home equity line of credit combined with a mortgage

    Most major financial institutions offer a home equity line of credit combined with a mortgage under their own brand name. It's also sometimes called a readvance able mortgage.

    It combines a revolving home equity line of credit and a fixed term mortgage.

    You usually have no fixed repayment amounts for a home equity line of credit. Your lender will generally only require you to pay interest on the money you use.

    The fixed term mortgage will have an amortization period. You have to make regular payments on the mortgage principal and interest based on a schedule.

    The credit limit on a home equity line of credit combined with a mortgage can be a maximum of 65% of your home's purchase price or market value. The amount of credit available in the home equity line of credit will go up to that credit limit as you pay down the principal on your mortgage.

    The following example is for illustration purposes only. Say you've purchased a home for $400,000 and made an $80,000 down payment. Your mortgage balance owing is $320,000. The credit limit of your home equity line of credit will be fixed at a maximum of 65% of the purchase price or $260,000.

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