If we can’t finance your Second Mortgage… NO ONE CAN!
- No Income Requirements
- No Minimum Beacon Score
- No GDS/TDS Requirements
- Up to 90% LTV Loan-to-Value (GTA)
- Same Day Approval and Quick Closing
People Seek and Obtain Second and Third Mortgages for the Following Reasons:
- Mortgage Arrears
- Debt Consolidation
- Stop Power of Sale
- Payout Consumer Proposal
- Property Tax Arrears
- Revenue Canada Tax Arrears
- Previously Bankrupt Clients
- Home Improvements
- Business Start-Up
- Purchase a Second Property
- Business Cash Infusion
- University Tuition
- Child’s Wedding
Second and Third Mortgages Explained:
A private second or third mortgage on a residential or commercial property is by far the most common type of private mortgage financing. There are reasons for this from both the borrower’s perspective and lender’s perspective. Borrowers utilize a private second or third mortgage to consolidate debt while leaving their existing first mortgage intact. A long term first mortgage is likely going to carry a lower rate than a private first mortgage, so if the first mortgage can be left alone a private second or third mortgage can be an excellent source of incremental cash flow.
Borrowers utilize a private second mortgage or third mortgage to consolidate debt while leaving their existing first mortgage intact. A long term first mortgage is likely going to carry a significantly lower rate than a private first mortgage, so if the first mortgage can be left alone, a private second or third can be an excellent source of incremental cash flow.
With respect to debt consolidation, even at higher than bank rates, a private second or third mortgage can allow the borrower to consolidate short term debt such as credit card balances and still end up with a lower interest rate. And because private mortgage debt servicing requirements are typically interest only, a debt consolidation loan can provide considerable relief to cash flow as well.
Another key benefit to securing a private second or third mortgage is the speed in which it can be put into place. While the average first mortgage will be placed in 5 to 10 business days, it is possible to go from application to funding a second mortgage in 2 to 5 business days.
From the lender or investor point of view, private seconds and thirds are ideal for building a portfolio of mortgages and spreading their risk across a number of mortgages. This is due to the fact that private seconds are typically for amounts under $200,000, greatly limiting the lender risk on any one loan.
Because of the second and third mortgage position, there is greater risk to a mortgage lender, so private second and third rates will also be higher than first mortgage rates, which is also attractive for many lenders that are looking for a certain rate of return on their money.
Lenders will typically charge both an interest rate and a lender fee on closing which collectively makes up their total rate of return on any one deal.
Most private seconds and thirds will provide a term of one year and some will provide an option for term renewal, but that is not typical among private lenders. In general, the stronger the real estate market in any area, the more private money will be available for second and third mortgages as lenders will have to approve funding on higher loan to value ratios where the related risk can only be managed by the strength of the resale market for similar property types.
Private Second and Third Mortgage Costs:
Although a private mortgage can help borrowers get out of a sticky situation, there are additional costs to consider.
First is the higher interest rate, which can range from a couple of percentage points above the bank rate to upwards of 15 percent. Lenders weigh the interest rate based on the LTV (loan-to-value), the property location and the overall risk of the loan.
Most private lenders charge between 12 and 15 percent for a 80-90 percent loan-to-value second mortgage.
Other costs borrowers should be aware of with a private second and third mortgage are lender fees, broker fees, legal fees and an appraisal.
How to Get Started:
Give one of our Private Mortgage Specialists a call today at 416-275-9284 or fill-out our Secure Online Mortgage Application at https://www.mortgagedirect2u.ca/mortgageapplication.php
We look forward to helping you with all your mortgage financing requirements.
Credit scores can range from 300 to 900 and are used by lenders to determine what kind of a risk you are likely to be as a borrower. Your score is based on several attributes -
Payment history
The single biggest factor in your credit score is having a timely bill payment history. Recent late payments are factored more heavily than old ones so start today and never let a bill get past due.
Amounts owed
Keeping your accounts near their maximum limit can signal that you don’t manage credit responsibly, and that you may have trouble making payments in the future.
Length of credit history
The longer you have had credit in good standing, the better. Keep your oldest cards; that good history will help you, and don’t regularly take out new credit accounts.
Pursuit of new credit
Opening several credit accounts in a short period of time is a risk factor. How many enquiries done on your behalf can also have an effect on your score.
Types of credit
A healthy mix of credit i.e. car loan, mortgage and credit card is more positive than a concentration of debt in only credit cards.
With an excellent credit score (750 and over), lenders will give you a quick mortgage approval at the best possible rates. This score says you are reliable and responsible with debt. At a lower score (below 620), you likely won’t get the best mortgage rates, you may require a larger down-payment, there could be extra fees, and you may even find it difficult to qualify.
Your credit score can change from month to month, which means you can boost your score relatively quickly with the right credit behaviours. We can review your situation and discuss how your score will be viewed by lenders and, if necessary, outline your best options for credit improvement. If you want to get a mortgage while you work on bettering your score, we can also advise how that may be possible.
DREAMING OF HOME:
Home ownership can make great financial sense. Over the long term, residential real estate has been a very strong asset – showing excellent appreciation. Renters who add up what they've shelled out during their renting years are often shocked to see how much mortgage help they've given their landlord. Most would prefer to have that money build their own home equity.
If you're dreaming of a home of your own, then there's good news. Getting into today's housing marketing isn't out of the question if you do some good common-sense planning.
RUN THE NUMBERS: First, determine what you can afford.
It happens: you fall in love with a home that seems perfect, but it is way outside your possible price range. Before you go looking at homes - and long before you consider putting an offer on one – you need to run the numbers. Get some professional guidance – there’s more to home ownership than a mortgage payment – and determine exactly what you can comfortably afford.
Meet with us first. Independent mortgage brokers are expert at providing the advice, education and resources that first-time buyers need. We can offer advice on boosting your credit rating, determining an affordable mortgage payment, and advising you on the extra costs that come with buying a home. Generally, you can expect to pay between 1.5% and 4% of the home’s selling price in total closing costs.
We can also make sure you have a pre-approval with an attractive rate – usually good for 90 to 120 days – so you’re house-shopping with a plan and a budget. Doing this work ahead of time will make you a confident and informed home-buyer. You’ll know exactly how much house you can afford – before you ever start dreaming of home!
GETTING THAT DOWN-PAYMENT: It might be easier than you think!
For many first-time home-buyers, that down-payment is one of the big obstacles to home ownership. Saving up cash – especially if you’re paying rent, paying down student loans, and trying to live a life – can be slow and difficult work.
In most cases, you’ll need to save up at least 5% of the purchase price of your home. But there are some programs and tips we can offer to give your down-payment a boost – to get you into your home faster:
1. Home Buyers' Plan (HBP) lets first-time home-buyers withdraw up to $25,000 each (or $50,000 for a couple) tax-free from their RRSPs. You’ll need to pay those funds back, of course, on a repayment plan.
2. A financial gift from a parent or blood relative can be used as a down-payment. This can not be a private debt; you’ll need to document in writing that the funds are a gift and you are not required to pay the money back at any time.
3. Start small. If your dream home is out of reach, look for a starter home. Use today’s low interest rates to start hammering down your first mortgage, then watch for the opportunity to get the home of your dreams – using the equity and credit rating you’ve been building!
Talk to us today – to ensure that you get off on the right foot in your home buying journey!
BEYOND RATE: Get expert advice
There’s a tendency to go rate shopping when you’re looking for a mortgage. After all, a great rate can save you thousands and help you better manage your debt. And that’s one reason so many first-time homebuyers are working with independent mortgage brokers. Most brokers have access to a wide range of established lenders – up to 50 – including major banks. They can compare rates across the board and show you where the best bargains are for your situation.
But the real value of a mortgage broker goes beyond rate. A mortgage broker provides invaluable education on mortgage preparedness. A first-time home-buyer should see a mortgage professional early – for tips to boost your credit rating (so you qualify for the best rates), and for advice on downpayment options. Your mortgage broker can sort through all of the mortgage options and get the right combination of features, privileges and rate that is best matched to your needs. It’s so important to consider term, prepayment options, refinancing penalties, restrictions, and fees because the right choices can save you thousands.
Dreaming of home? Come see us. We’ll get you started!
CREATE AN EMERGENCY FUND: Someday, something will go wrong.
Somewhere in that first-time home-buyer’s budget you need a line item that says “Emergency Fund”. You may think that you don’t need it; if something happens, you could take out a Line of Credit, right?
Every homeowner should have an Emergency Fund set aside. That’s because someday, something will go wrong. Imagine the roof suddenly starts to leak. Or you discover mould in the basement. Or maybe you get hurt and need to take a month or two off work. What happens to your carefully designed budget then?
Having an emergency fund in place before you buy a home will give you peace of mind – knowing you have some financial buffer to tackle an unexpected financial obstacle.
So what about that Homeowner Line of Credit? Well your mortgage broker can provide some guidance; it’s often a good idea to have a low-interest financial safeguard – before you need it. Just keep in mind that it is also borrowed money. If you use your Line, you’ll need to budget carefully to pay it back.
