What are the usual terms for a second mortgage in Ontario?

The second mortgage loan usually has terms of up to 20 years and a minimum of one year, depending upon the ability to repay the loan each month.

How much can we expect with a second mortgage?

The expected amount that can be borrowed with a second mortgage depends on the equity against your property. In other words, the more equity you possess on your property, the greater is the chance of getting a second mortgage. Usually, the mortgage company will allow you to borrow up to 80% of your property’s value, with a recommended equity ratio of 20%.

How much time is required for the approval of a second mortgage?

The entire process usually takes 4 to 5 weeks on average, depending solely on the lender and borrower. However, with Alpine Credits, you can avail yourself of the credit within a matter of days. Choosing a second mortgage is not an easy task. We recommend getting in touch with Alpine Credits to discuss your needs and understand whether one of our loans is right for you.

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A guide to second mortgages in Edmonton

Whether you need $10,000 or $50,000 – Alpine Credits is the best alternative for second mortgages in Edmonton

Edmonton is a steadily growing city with people considering investments in a second home to generate income or to have a summer home. To get another house in Edmonton, residents may consider a second mortgage. One of the ways they can acquire additional property is by accessing the equity in their current home.

How do second mortgages work in Edmonton

If you already own a home and you wish to acquire another piece of property using the equity in your home, you would be applying for a second mortgage. Unlike your primary mortgage, the value of a second mortgage depends on the value of the difference between your outstanding mortgage and the house’s appraised value, which is also known as your home equity. The longer you’ve been paying down your mortgage, the higher your loan could be, which can also be referred to as a home equity loan.

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Benefits of second mortgages in Edmonton

Homeowners in Edmonton enjoy the same benefits other Canadian homeowners experience when they obtain a second mortgage.

Flexibility

A second mortgage can be used in different ways, including investing in a business, renovating the house, or consolidating credit card charges. Some may use it to finance tuition or buy a house.

Lower mortgage rates

A second mortgage is a good option for large expenses like renovations because they have lower interest rates than credit cards or personal loans.

Loan consolidation

Another advantage is that it can be used to pay off your outstanding bills. Because of their comparatively lower rates, they allow you to save money on interest.

How do second mortgages work in Edmonton

You can find a variety of second mortgage lenders in Edmonton. The most common are major financial institutions and alternative lenders. While both establishments might offer the same terms, qualifying for them is different.

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Traditional mortgage lenders

When buying another house in Edmonton, the bank is usually the primary mortgage lender and will set different standards than when you bought a house for the first time.

Credit score

Major financial institutions will require a credit score of at least 680 points. Even having the minimum doesn’t guarantee approval.

Credit score

Major financial institutions will require a credit score of at least 680 points. Even having the minimum doesn’t guarantee approval.

Down payment

One of the key differences in the down payment between a first property which is your principal residence and a second property, is the size of the down payment. Traditional lenders may ask you to provide at least a 20% down payment for the second property.

Employment verification

If you’re self-employed, getting another mortgage will require additional documentation, which lengthens the process. Traditional lenders are known to prefer salaried applicants.

Alternative lenders

Because traditional lenders have high standards for getting another mortgage, many residents of Edmonton look for different options. Alternative lenders provide a more straightforward solution for Edmonton residents.

Being an alternative lender, Alpine Credits uses different criteria to determine applicants’ eligibility. Instead of verifying credit history or income, the main determining factor of the applicant’s approval is the equity they have in their home. They could be eligible for a home equity loan as long they have paid at least 25% of the existing mortgage.

Second mortgage process in Edmonton

The steps to getting a second mortgage in Edmonton are not that different from getting a second mortgage from somewhere else in Canada. In general, the steps you can take are below.

Research lenders

The right lender will accommodate your financial situation and try to understand every aspect. Each lender has their own benefits, so choose one that best suits you.

Choose a lender

After your research, you can make a shortlist of preferred lenders and contact them. Contacting them and following up with lenders is good practice to determine the right choice.

Prepare documents

You can do this simultaneously with the previous steps. While only some lenders require your credit score or bank statements, all lenders will ask for identification, your current mortgage information and proof of home ownership.

Appraise property

After you’ve finalized which lender you want to work with, the next step is to appraise your house. Some lenders provide this service, while others may ask you to conduct it externally.

Apply for a second mortgage

Most lenders have their application forms online, which makes them accessible. You can apply directly to Alpine Credits online.

What to consider before getting a second mortgage

Using your home equity can be an exciting new opportunity for you and your financial goals. Regardless, second mortgages are still loans and should be applied for once you’re confident they are within your budget. While making your decision, think about:

the purpose of the second mortgage— getting a second mortgage is a significant step in your financial journey, so being sure about what you will use it for is just as important. Good uses for them include another property or home renovation.
your repayment plans— before applying for a second mortgage, having a repayment plan is a good strategy. The plan will let you see what is manageable for your financial situation and allow you to communicate with your lender effectively.
your financial situation— getting a second mortgage usually comes with fees and interest payments. Be sure to calculate those costs when making your repayment plan and confirm that you can manage your finances.

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Home equity loan as a second mortgage in Edmonton

Additional mortgages bring several advantages to homeowners in Edmonton. Not only do they enable residents to buy another home, but they also provide the flexibility to renovate the house or consolidate financial obligations.

To access your home equity as a second mortgage, contact a Financial Solutions Specialist at Alpine Credits. They’ll be able to answer all your home equity loan questions and walk you through the approval process.

Frequently asked questions

What is the difference between a first mortgage and a second mortgage?

There’s little difference between a first and second mortgage. They are similar and can be used for loan consolidation or home renovations rather than just financing another house. The only difference is that a first mortgage holds the highest priority lien on the property.

Are there any tax benefits associated with second mortgages in Edmonton?

You may be eligible for tax benefits if you use your second mortgage for specific reasons. If you renovate your home to be more accessible, like adding ramps or handrails in the bathroom, there may be government grants and tax deductions. Similarly, if the funds are used for certain investments, the interest paid on the mortgage may be tax deductible.

Can I use a second mortgage for loan consolidation in Edmonton?

Using second mortgages for loan consolidation is not only a possibility but a common solution for many Canadians to manage their finances. They usually have comparatively lower interest rates than the combined interest rate of multiple credit cards, which makes second mortgages a favoured option for loan consolidation.