Second Mortgage Lenders in Calgary
Your Calgary and Alberta Mortgage Expert
What is a Second Mortgage?
A second mortgage lenders, also known as a "2nd mortgage" or a "home equity loan," is a loan that allows you to borrow additional funds using your home as collateral.
While it provides a valuable source of funds, it carries more risk than a first mortgage, as the first mortgage lender gets priority in case of default. Consequently, second mortgages often come with higher interest rates.
With at least 20% equity in your home, you could qualify for a second mortgage. This option is perfect when you need money to renovate your home or access cash for business needs.
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Second Mortgage among Home Equity Loans
A Home Equity Loan is a loan secured by a home. A mortgage is a loan that uses real property as collateral. A home equity loan is a fixed amount of money given to the borrower with a set repayment schedule and interest rate. It is the same as a mortgage. The loan includes residential first mortgages, home equity lines of credit and second mortgages. In Canada, home equity loan refers to second mortgages.
Comparison of Second Mortgage with HELOC and First Mortgage
|
First Mortgage |
HELOC |
Second Mortgage | |
|---|---|---|---|
|
Security |
Always Secure |
Might become unsecured |
Canbecome unsecured |
|
Availability |
All mortgage lenders |
Most Mortgage Lenders |
Few Mortgage Lenders |
|
Relative Interest Rate |
Low |
Medium |
High |
|
Fixed or Variable |
Both Available |
Variable Rate |
Both Available |
Second Mortgage Lenders
All the big banks offer HELOCs, however, RBC and BMO are the only major banks offering home equity loans (second mortgages). Many small lenders and private lenders might also offer second mortgages. Here are some of the mortgage lenders in Canada including second mortgage lenders:
| Private Mortgage Lenders | ||||
|---|---|---|---|---|
| Canadalend | Clover Mortgage | Westboro Investment | Cannect | Akal Mortgages |
| Alpine Credits | Dhugga Mortgages | VWR Capital | Prudent Financial | Calvert Home Mortgage |
| Guardian Financing | Private Lender Inc. | Cliffton Capital Corporation | ||
| HELOC Lenders | ||||
|---|---|---|---|---|
| RBC | TD | Scotiabank | CIBC | BMO |
| HSBC | Tangerine | Laurentian | Meridian | National Bank |
| ATB Financial | First Ontario | DUCA | Butler Mortgage | MCAP |
| Home Trust | Canadalend | Akal Mortgages | ||
A Home Equity Line of Credit (HELOC) is a popular type of second mortgage, allowing homeowners to borrow against their home equity.
HELOC provides a revolving credit line, similar to a credit card, where you can borrow and repay the funds as required. The interest rates on HELOC are lower than the other forms of credit, making them an attractive option for financing home renovations, consolidating high-interest debt or covering unexpected expenses.
It is important that you manage the debt carefully as failure to repay could result in the risk of foreclosure. You do not have to get a HELOC with your current mortgage lender. You can get a second mortgage with another bank or lender.
If your mortgage is registered on your title as a standard charge mortgage, getting a second mortgage or HELOC entails registering a new charge on the title. If the current mortgage is registered as a collateral charge on the title, the current lender can offer a HELOC or a second mortgage without requiring registration of a new charge on the title.
Some banks and lenders offer re-advanceable mortgages which blend a HELOC into your existing mortgage. The HELOC portion of a re-advanceable mortgage has a credit limit that automatically increases you make your re-advanceable mortgage payments.
Home Loan Equity and Private Mortgage Lenders
Home loan equity is a fixed amount of money that you borrow based on your home equity. The HELOCs have variable interest rates that change with the prime rate; the home equity loans can have either a variable rate or a fixed rate.
You can borrow up to a combined 80% of the value of a home with the existing mortgage, HELOC or a home equity loan if you are borrowing from a financial institution. Private lenders also offer home equity loans.
Here is the difference between HELOC and Home Equity Loan
|
HELOC |
Home Equity Loan | |
|---|---|---|
|
Time |
Can Borrow at any Time |
Can only borrow a one-time lump-sum amount |
|
Repayment Time |
Repay at any time |
Cannot repay whenever you want to |
|
Interest Rates |
Low |
High |
|
Lengths |
Long |
Short |
|
Credit Score |
Good |
Bad are also accepted |
|
Maximum Combined LTC of |
80% |
95% |
How does a second Mortgage Work?
- A second allows the homeowners to borrow against the equity in their property in addition to their primary mortgage. The loan amount is based on the equity you have built in your home.
- It is the difference between the home’s current value and the balance of the first mortgage.
- A second mortgage can be in the form of a Home equity line of credit or a home equity loan, offering flexibility or lump sum funding.
- It can be used for various purposes like debt consolidation or home renovations.
- It comes with risks as failure to pay results in foreclosure.
- The interest rates are higher than the first mortgages but still lower than credit cards or personal loans.
Second Mortgage Conditions
You can borrow up to 65% of the home’s value with a HELOC or up to a combined total of 80% with the existing mortgage. The amount that you can borrow from a second mortgage will depend on the amount of home equity that you own. The combined mortgage size versus the value of your home is the loan-to-value ratio.
Comparing First Mortgage and Second Mortgage
First Mortgage
- It is the original loan you take to purchase your home.
- It is secured by the property and the lender holds the first claim on your home if you default.
- The first mortgages have lower interest rates compared to second mortgages
- In case of foreclosure, the first mortgage is paid off first before any other loans.
- The loan amount is huge as it covers most of the home’s purchase price.
- Long repayment terms of 15 years to 30 years with fixed or variable interest rates.
- The first mortgage is used to buy the home or refinance an existing mortgage.
Second Mortgage
- A second mortgage is a loan taken in addition to the first mortgage using the home’s equity.
- This loan is secured by property but holds a secondary claim in case of foreclosure after the first mortgage is settled.
- They have higher interest rates due to increased risk for the second mortgage lenders.
- In case of default, the second mortgage is repaid only after the first mortgage is fully paid in case of foreclosure.
- The loan amount is smaller and depends on the equity in your home.
- The shorter repayment terms compared to first mortgages, usually 5 to 20 years.
- Used for debt consolidations, home renovations or emergency expenses.
Comparing First and Second Mortgages
| First Mortgage | Second Mortgage | |
|---|---|---|
| Interest Rate | Lower than the second mortgage | Higher than first mortgage |
| Borrowing Amount | More than second Mortgage | Less than first mortgage |
Second Mortgage v/s Refinancing- Why Prefer Second Mortgage
Both help access the equity in your home, but they differ in structure and purpose. Refinancing involves replacing the existing mortgage with a new loan, often at a lower interest rate, to consolidate debt or access equity. It can increase your debt if you roll additional loans into the new mortgage.
A second mortgage allows you to take out additional loans while keeping the original mortgage intact. It offers flexibility to homeowners who need a specific amount of extra funds for home renovations or debt consolidation.
Second Mortgage: Who Is It For?
Great option for homeowners who need extra cash to:
- Debt Consolidation: Combine multiple debts into a single loan with potentially lower interest rates, reducing your monthly payments.
- Home Renovations: Upgrade your home and increase its value with funds from a second mortgage. Kitchen, bathroom, or add a new room.
- Education Expenses: Use your home's equity to help pay for tuition or other educational costs for yourself or your children.
- Medical Expenses: Cover unexpected medical bills.
- Business Ventures: Fund a new business or expand an existing one.
Second Mortgage Benefits:
- Lower Interest Rates: Benefit from lower interest rates compared to other forms of credit, saving you money in the long run.
- Flexible Repayment Terms: Enjoy flexible repayment options that fit your financial situation, ensuring a comfortable and sustainable payment plan.
- Potential Tax Advantages: Consult with a tax professional to understand how the interest paid on a 2nd mortgage may be tax-deductible.
Second Mortgage Eligibility and Requirements:
A second mortgage is a loan that allows you to borrow additional funds using your home as collateral.
While eligibility criteria may vary, some general requirements for obtaining a second mortgage include:
- Demonstrated ability to repay the loan
- Good credit history and credit score
- Adequate equity in your home
- Proof of income and employment
Don't worry if you have unique circumstances or have been turned down by other lenders. M Pabla specializes in finding solutions for challenging situations and will work with you to explore available options.
Application Process:
Applying for a Second mortgage with Us is straightforward and convenient. Our mortgage expert, Manpreet Pabla will guide you through the following steps:
1. Consultation: Call us to discuss your financial goals and determine the best solution for your needs.
2. Documentation: Gather the necessary documents, such as identification, income verification, and property information.
3. Application Submission: Submit your application online, by phone, or in person, and our team will review it promptly.
4. Approval and Closing: Once approved, we'll guide you through the closing process, ensuring a smooth and efficient transaction.
5. Access Your Funds: Upon closing, you'll receive the funds you need to achieve your goals, whether it's debt consolidation, home renovations, or other purposes.
Looking to Secure the Funds You Need for Your Goals? Let's Get Started!
Experience the Benefits of Competitive Interest Rates and Flexible Repayment Options, and Turn Your Dreams Into Reality With a Second Mortgage. Manpreet Pabla, an Expert Calgary Mortgage Broker Is Here to Guide You Every Step of the Way!
Call Us Now to Get Pre-Approved Today!
Frequently Asked Questions
-
How does a second mortgage differ from a primary mortgage?
While a primary mortgage is used to purchase a home, a second mortgage is an additional loan that utilizes the equity you have built in your home.
-
What is the difference between a home equity loan and a home equity line of credit (HELOC)?
A second mortgage, or home equity loan, provides a lump sum, while a HELOC allows you to access a revolving line of credit as needed.
-
Why would I need a second mortgage?
People often choose a second mortgage for home improvements, debt consolidation, education expenses, or major life events like weddings or medical bills.
-
Are there any risks involved with a second mortgage?
Like any loan, there are potential risks associated with a second mortgage. It's important to understand the terms and repayment obligations. Our mortgage broker will provide comprehensive guidance, ensuring you make an informed decision.
-
What are the advantages of a second mortgage?
Benefits include access to cash, potentially lower interest rates than other forms of credit, and potential tax benefits.
-
Can I pay off my second mortgage early without penalties?
The terms vary, but some second mortgages allow early repayment without penalties. Be sure to clarify this with your lender.
-
How long does it take to get approved for a second mortgage?
