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Using second mortgage to pay off debt

You’ve probably asked yourself if there’s a way you can use the financial potential of your home to achieve your financial goals and aspirations. Second mortgages are a great place to start as they allow you to access funding for home renovations, business investments, additional mortgage payments, or debt consolidation. To get started, you’ll have to know how to get a second mortgage in Canada.

Second mortgages and loan consolidation 

When managing your finances, loan consolidation is a good strategy that has helped countless borrowers. Loan consolidation is when borrowers combine their bills and outstanding loan obligations into a single, more manageable loan. This loan is used to satisfy these financial obligations, and all you’ll have to do is repay the second mortgage. 

It helps borrowers streamline their financial planning and gives them the peace of mind of focusing on a single loan, with monthly payments and a fixed interest rate rather than multiple.

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How to get a second mortgage with Alpine Credits 

One of the advantages of Alpine Credits is the speed and ease with which a borrower’s application is processed. When applying for a home equity loan with Alpine Credits, applicants can expect to encounter a simple three-step application process: 

  • Visit the Alpine Credits website and fill out the application form. 
  • Get approved within the same day. 
  • After receiving approval, the funds can be transferred directly into your account in as little as a week. 

Documents required during the application process 

Unlike the application process at big banks, you won’t need to worry about pulling up multiple credit reports and payment slips. When you apply with Alpine Credits, you’ll be asked to provide a few simple documents verifying certain details about your home. Here’s what you can expect: 

  • Valid identification— in Canada, you must be at least 18 to be eligible for a loan. On a similar note, you also need to be a Canadian resident or permanent resident to qualify. In most cases, a passport or valid driver’s license will work as valid forms of ID. 
  • Proof of ownership and insurance— a home equity loan from Alpine Credits is centred around applicants already owning their homes. As such, you may be asked to provide proof of home ownership. Additionally, your home must be insured to qualify for a home equity loan, so you may be asked to provide proof. 
  • Mortgage payment history— at Alpine Credits, homeowners should have paid down at least 25% of the property’s value to be eligible for a home equity loan. You can show proof of this by providing your first mortgage statements.  
  • Home appraisal— a home appraisal helps homeowners understand the property value in the current market. As such, you must provide a home appraisal document indicating that your home has been appraised. Various appraisal companies across Canada can assist you with this.  

Benefits of using a second mortgage to consolidate loans

Second mortgages can be incredibly valuable to homeowners as it comes with a relatively low interest rate. The loan is secured against some form of collateral, such as the borrower’s home, as such, lenders will be more inclined to offer lower and more competitive mortgage rates than other unsecured loan options.

Tips to remember when using a second mortgage to pay off debts  

Using your second mortgage is a great way to start your journey towards becoming more financially secure. You can make the most of your second mortgage by incorporating a few tips.  

  • Create a budget— a clear and easy-to-follow budget is at the heart of every successful financial management plan. A good budgeting plan will allow you to look at your financial obligations and understand which of them you should prioritize paying.  
  • Avoid unnecessary expenses— when using a second mortgage to get your finances back in order, paying off your outstanding balance is essential. It would be counter-productive to use a second mortgage for personal expenses.  
  • Seek financial counsel if needed— second mortgages have much information that can be challenging to digest in one go. In these situations, seeking financial counsel by asking your mortgage lender more questions or consulting a financial expert can be very helpful. Multiple resources will always be available during your application process and beyond.  

Conclusion: using second mortgages to pay off debts

An additional mortgage, if used correctly, can be a powerful financial tool that can help you unlock your home’s economic potential and allow you to manage your financial obligations quickly. It gives you the financial freedom to be on top of your outstanding balances. A second mortgage with the right lender like Alpine Credits can be a game changer for your financial situation.

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Frequently asked questions

A second mortgage can be an excellent way to pay financial obligations. Homeowners in Canada can use the funds from a second mortgage in their financial planning.

Second mortgages can benefit homeowners as they can be secured at lower interest rates than other alternatives. This is because the borrower’s home secures the loan, making lenders feel more comfortable providing competitive interest rates. Moreover, second mortgages like home equity loans are easier to qualify for than other alternatives.  

For instance, if you own a home and apply with an alternative lender like Alpine Credits, your credit score and income status won’t be considered. This isn’t the case when you apply for a traditional consolidation loan with a bank.  

If you are a homeowner whose home has a decent amount of equity available, it’s a might be a good idea to use it for loan payments depending on your financial situation.