If you are currently living in Toronto and are seeking to take out a second mortgage, you’re not alone. Second mortgages are fairly commonplace, especially among homeowners, including those living within the Toronto area. There are two primary options to consider when seeking out a second mortgage: a private second mortgage or a traditional second mortgage. These mortgages are available at various institutions, businesses and even individuals in Toronto.
Obtaining a Second Mortgage in Toronto
Before you can obtain a second mortgage in the Toronto area, you’ll need to do some preparation. The first thing you should do is find out your credit score. Your credit score could have a significant impact on the interest rates for your second mortgage—it can even determine whether or not you qualify for a traditional second mortgage in the first place!
Then, you’ll need to decide whether or not to seek out a second mortgage from a traditional source or through a private or independent mortgage lender. Let’s take a look at the different benefits of each type of mortgage to help you decide which is the best option for your circumstances.
Traditional Second Mortgages
Traditional second mortgages available in Toronto are offered by traditional lending institutions, such as banks, credit unions, and financial institutions. Traditional second mortgages have longer payback periods, which can last anywhere from 10 up to 30 years; the lending limit for second mortgages from traditional institutions tends to be higher as well. In order to qualify for a traditional second mortgage, you will need to have evidence of good financial standing, at least a decent credit score, and give credible evidence to the financial institution that you are at low-risk for non-payment or missed payments.
Private Second Mortgages
Private second mortgages in Toronto are offered by independent or private lenders, which can range from individuals to organizations and other businesses that don’t fall under the realm of a traditional financial institution. The primary benefit of a private mortgage is that the qualifications for obtaining the mortgage are not very strict and they are readily available to people who were rejected from applications for traditional second mortgages. The payback periods for private mortgages is often short, ranging anywhere from 6 months to up to 2 years. The lending limit for a private second mortgage will vary depending on the lender; individual lenders tend to have lower limits than independent businesses.
Which Is Best For You?
The type of second mortgage in Toronto that you choose will depend on personal factors. Questions that you should ask yourself before deciding on what type of second mortgage in Toronto to apply for include: What is your credit score? How much money are you hoping to loan? What type of payback period do you need or want for your loan? Why are you taking out the mortgage? The answers to these questions will help point you in the direct of the type of second mortgage which best suits your needs.