How to get a second mortgage in Alberta
Whether you need $10,000 or $500,000 – Alpine Credits is the best alternative for second mortgages in Alberta
Second mortgages in Alberta can provide new financial opportunities such as loan consolidation, business investment, and home renovation. When looking for financial support, homeowners in Alberta can use the equity in their homes to their advantage.
Accessing home equity loans in Alberta through a second mortgage can be a simple process. You’ll learn how to go about it here.
What’s a second mortgage in Alberta?
In a literal sense, a second mortgage is an additional mortgage loan that takes second priority to your primary mortgage loan. If you’ve completely paid for your current home, all your focus can be repaying the second mortgage.
The value of second mortgages in Alberta is exclusively based on how much home equity you have. You can calculate it by subtracting your outstanding mortgage balance from the appraised value of your home. Depending on the criteria, lenders let you borrow up to 75% of your home equity.
With housing in Alberta, especially Edmonton and Calgary, having high appraisal values, you could be approved for a significant loan if you own at least 25% of your house. The more equity you have in your home, the bigger the loan you can get.
Reasons Why Albertans Use Second Mortgage
One of the most flexible and efficient financial tools for homeowners is accessing their property’s equity value as a form of cash. The loan can have a high value, letting borrowers use it for any purpose, some of which are the most common reasons.
To Consolidate Loans
Paying multiple credit cards and loans can be challenging to keep track of. Not because you have to send a payment every month to the creditor manually, but rather, budgeting can feel like a chore. People consolidate all their outstanding financial obligations with a second mortgage to make financial planning more manageable.
Because of interest, the cumulative expense of repaying multiple creditors can be higher than people expect. To save money and simplify financial management, a second mortgage can cover all outstanding balances. Borrowers have only one loan to repay, with comparatively lower interest rates.
To Renovate The House
If you plan to give parts of your house complete makeovers or landscape your yard, second mortgages are one of the best ways to finance those goals. Some may choose unsecured personal loans or lines of credit, but they can have high interest rates, and credit cards have limits. Spending several thousand dollars on renovations could be done through another method, namely second mortgages.
Second mortgages are more attractive because they can be higher in value than unsecured personal loans while having lower interest rates than credit cards. They are also more straightforward to get approval for than other types of loans.
To Invest In A Business
Whether you want to start a business or need additional funding for your existing establishment, a second mortgage can provide the financing. You can use second mortgages to lease a location, buy new equipment, or improve your working capital or cash flow. Investing in your entrepreneurial venture can generate more income and improve your employees’ work environment.
Traditional business loans might require a well-documented business plan to be approved. Second mortgages with the right lender don’t have restrictive criteria, making them a viable option for entrepreneurs of all backgrounds.
To Buy Another House
You’ll need to provide a down payment to get a piece of property. Second mortgages, specifically home equity loans, can offer more than enough for a property down payment. You can buy a condominium to generate rental income or a lakeside property as a vacation cottage.
To Make Other Significant Purchases
Because second mortgages aren’t specialized, they can be used for any purpose. Some other significant expenses include tuition or emergency funding. Some second mortgage lenders process applications faster than major financial institutions, which makes them a good choice for people who need the funding quickly.
Some people may use a second mortgage in Alberta to finance a wedding or purchase a vehicle. Overall, a second mortgage is flexible and can be used for any big expense.
Is a second mortgage in Alberta the right solution for you?
If you’re looking for a loan with flexibility for any of the above reasons, a second mortgage in Alberta may be the right solution. Homeowners have a unique opportunity, and it’s good to take advantage of the tools you have available.
Of everything to know about second mortgages, it’s important to remember that they are still loans. Like any other financial tool, they should be thoroughly considered. They can help you achieve your financial goals if used with diligence and for the right reasons.
Types of second mortgages in Alberta
The defining characteristic of second mortgages is that they are funding sources that have their value based on your home equity. Residents of Alberta have two ways they can access a second mortgage. One is through a home equity line of credit, and the other is through a home equity loan.
Home equity loans
Home equity loans allow you to receive a lump sum and repay it with interest on a specified frequency. Usually, the monthly payments have fixed interest, allowing you to track your finances efficiently. Home equity loans are popular options for significant, one-time expenses.
With home equity loans, you can get more than that amount with reasonable interest rates. You can get started today by applying with Alpine Credits.
Home equity lines of credit (HELOCs)
A HELOC is similar to credit cards, allowing you to borrow money up to the limit set by your equity value and typically with variable rates. They have two phases: the draw period and the repayment period. The draw phase can be as long as ten years, and the repayment as much as 20 years, making HELOCs a long-term financial commitment.
How To Qualify For Second Mortgage in Alberta
Regardless of where you apply for a second mortgage, the main contributing factor to your approval is the amount of equity you have. Depending on the lender, you must also provide your credit history and income. Each lender works differently and has different requirements.
With Traditional Lenders
In addition to having enough home equity, the second mortgage lenders in Alberta will also require the following criteria.
- Strong credit score—with most major financial institutions, you’ll need a credit score of at least 680. Lower scores still have a chance to get approved, but the loan may come with high interest rates.
- Regular income—if you’re a business owner or a freelancer, proving that you have a steady income will be more challenging than a salaried employee.
- Mortgage stress test qualification—some lenders will conduct mortgage stress tests to determine if your current financial situation can handle another significant loan. Traditional lenders want to ensure you pass this test, even if you’re finished repaying your first mortgage.
They will also ask for other information, such as your identification and mortgage details.
With Alternative Lenders
Unlike traditional lenders, outside of requiring your home appraisal and equity, alternative lenders will likely not require documents that relate to your financial and employment status.
- Sufficient equity—like banks, you’ll need at least 25% of your property paid for. Some lenders may require more of your property to be paid for.
- Valid identification—the lender will also ask for your banking information to ensure the money goes to the right person.
- Canadian citizenship or permanent residency—second mortgages can only go to those who are residents of Canada.
Alternative lenders put less significance on your financial history when assessing your application. For the most part, you’ll only need to provide your identity and the value of your home equity. When you need a home equity loan, alternative loan providers have more flexible standards that allow most homeowners to access their home equity easily.
Securing A Second Mortgage in Alberta With Alpine Credits
Alpine Credits is an alternative lending option offering second mortgages in Alberta, specifically home equity loans. For the past few decades, they have been helping Albertans access the equity in their home as a lump sum.
One of Alpine Credits’ highlights is that the application is simple and easy to follow through with.
- Apply online —you can apply directly on the Alpine Credits website, which only takes a few minutes. You’ll be asked for the appraised value of your home.
- Receive results —Alpine Credits will provide your results within days, unlike traditional financial institutions that take weeks to months to process applications.
- Use the money —shortly after determining your application results, the funds will be deposited directly into your bank account, allowing you to use the funds.
You naturally build equity as you pay your regular mortgage payments. At Alpine Credits, if you have at least 25% home equity, you’re eligible to get approved for a home equity loan. If you have enough, the loan you could get can be worth up to 75% of your equity.
You don’t need to prove that you have a good credit score or a steady income; you only need sufficient home equity.
Frequently asked questions
You can secure a second mortgage despite having a less-than-ideal credit score. Alternative lenders like Alpine Credits cater to borrowers facing challenges with their credit score or income history. They provide customized home equity solutions without overanalyzing your credit score and mainly look at the equity available within your home.
Second mortgages are flexible in their use. The funds gained can fund home renovations, loan consolidation, or other business ventures. There are no restrictions on how the funds should be used; homeowners can use them as they see fit. This is also what makes second mortgages an attractive financing option.
If you’re a homeowner with over 25% equity already built in your home, applying for a second mortgage can be a great idea. Doing so can help you achieve a wide variety of financial goals.
Lenders have different criteria. In the case of Alpine Credits, all you need is to own your home, and you’re eligible to be approved for a home equity loan.
The total cost for a second mortgage will vary between lenders. If you’re considering the value of a second mortgage, it will also vary depending on how much equity you have.
Second mortgages are generally beneficial, so disadvantages aren’t easily evident. One aspect to acknowledge is that your property usually secures a second mortgage. So, you need to own a sufficient part of your property to qualify for a significant amount.
One of the best places to get a second mortgage in Alberta is from Alpine Credits. The application process is more straightforward with them because you don’t need to provide your income. Owning at least 25% of your home is enough for you to be eligible for a home equity loan.