A second mortgage of the property in Ottawa is the second loan you take out on an already mortgaged property. In general terms, a second mortgage is in the form of a Home Equity Line of Credit (HELOC) or another mortgage – a home equity loan.
Borrowing amounts are typically lower than your first mortgage while the interest rates remain higher. More often people take out a second mortgage for their debt consolidation; pay for significant purchases like home improvements or for investment purposes likewise a down payment on a second property.
Why Do You Need a Second Mortgage?
If you are looking for reasons to consider a second mortgage of the investment property in Ottawa, Canada, read on the post and consider accordingly.
Consolidation of debts –
You can use a second mortgage to pay off other debts by consolidating debts into a single payment. Particularly, it’s useful for paying off higher interest debts like student loans or credit cards. By grouping your debts, you may be able to pay off them at a lower rate of interest.
Making home improvements and other significant purchases –
Second mortgages make a perfect opportunity to borrow money for home improvement projects which could in turn increase the overall value of your home. Sometimes, second mortgages are used to fund significant investments by using the home equity like college or business expenditures.
Purchasing a second property –
Most people use a second mortgage of the property in Ottawa as the down payment for the second property. If you are thinking to invest in a second property, it requires at least 20% for a second mortgage as the down payment unless you and your family will be living in the new home without paying the rent. The cost of the second home will be mostly same like your first property including the valuation cost, administration and legal fees.
Final Consideration –
Overall getting a second mortgage of the property in Ottawa is an important decision. It allows you free up the equity in your home for things like debt consolidation, investing in second property or doing home improvements – there are no strict rules on how to choose to invest the money you receive from the HELOC or a home equity loan.
On the other hand, second mortgages are the significant financial responsibilities on the top of your existing payments and will impact on your debt-to-income ratio. They are likely to have higher rate of interests than your first mortgage or refinancing as the lenders don’t have the much interest in your home as your original lender.
Ultimately, taking out a second mortgage of the property in Ottawa is a major financial decision. You should make sure that you understand what exactly you are looking for and look around for the best rate of interests available to you.
Discuss with a mortgage broker regarding second mortgage of the property in Ottawa available at Woollam Mortgage Team and let us help you know whether a second mortgage works right for you. We will help you with mortgage renewal in Ottawa. For more details about second mortgage options, please contact us today at 613-276-1351.