Commonly Asked Questions
A second mortgage is a secured loan and lets you borrow against the value of your home, giving you access to significant sums of money. They have favourable interest rates compared to unsecured loans. Common uses include home renovation and debt consolidation. Lenders will look at your equity, your income, credit score, and your property.
A second mortgage is a versatile and useful tool that can be beneficial, and may even save you money. They make good sense if you have equity and large expenses planned. Talking to an expert can help you better understand your context and situation.
The amount you can borrow on a second mortgage will be determined by the existing equity in your property as well as additional factors such as income and credit score. The greater the equity in your property and the higher your credit score the more money you can borrow.
When you take on an additional loan like a second mortgage that is reflected in your score. In the short term this could be a negative impact on your credit score, but if used to consolidate debt at a more manageable rate it can be beneficial over the long term.
Since a second mortgage is a secured loan it will have a lower interest rate than unsecured loans like credit cards. This works to your advantage when consolidating debt as you can transfer high interest loans to a lower interest loan, saving you money in the long term.
A second mortgage can be a lump sum or a line of credit. A home equity loan provides a lump sum of money and is paid back in installments. With a home equity line of credit, or HELOC, you can borrow as needed and pay back over time.
