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Did you know that, in Canada, it is possible to get a loan that is leveraged against a property that already has a pre-existing mortgage loan?

This loan, known as a second mortgage, can typically be taken out by any homeowner as long as certain criteria are met. Since this type of loan also involves using your house as collateral, when you receive it, you technically hold two mortgages on the same property at the same time. 

The main benefit of getting a second mortgage is gaining access to the equity you have established so far in your home in the form of either cash or credit, which you can use for various purposes, such as consolidating your credit or paying for home renovations. 

Generally, a second mortgage involves receiving a one-time lump-sum payment at the beginning of the loan period, and then paying this loan off in increments over a set period.

Alternatively, if you choose a home equity line of credit (HELOC) instead, which is another way to access your home equity, you would receive a revolving loan. The lender would agree to the loan up to a certain amount during an agreed-upon period, but this amount could be replenished as you pay it off (just like a credit card).

How can you get a second mortgage?

If you are interested in getting a second mortgage, you must go through an application process with an official lender just as you would for a primary mortgage. However, the qualifying process is a little different for this type of loan. 

While it is typically an option to go through this process and apply for the loan with the same lender as your initial mortgage, it is also possible to seek out a different lender if you can find a better interest rate elsewhere.

When you apply for a second mortgage, the lender will look into various factors before making a decision about their approval of this loan. These factors include your credit score, which typically should be above 620, or your debt-to-income ratio, which should be less than 43%.

It is also up to the lender to decide the size of the loan that you are eligible for, which they will typically base on your home’s current value and the amount of equity you have in your home. Since the value of your home must first be determined, you must apply to have your home appraised.

Once this has been done, and your lender has collected all the information they need pertaining to your finances, your debt history, and your home, their underwriter takes a few weeks to review your application before you receive a response.

The Main Rules for Getting a Second Mortgage in Canada 

Although the process of applying and getting approved for a second mortgage is relatively straightforward, there are a few cardinal rules pertaining to this particular kind of loan process that are important to be aware of. 

These rules dictate important factors, such as how much money you can get and how you must proceed as you pay the loan off.

1. How much you can borrow

One of the most important rules to understand as you partake in a second mortgage loan process is that there are limitations to how much you can borrow. 

Canadian laws stipulate that lending against real property can only be done to a maximum of 80% of that property’s value. This includes the amount you have borrowed already with your primary mortgage.

Therefore, the allowance for your second mortgage largely depends on the size of your first mortgage. For instance, if your home is valued at $500,000 and you still owe $200,000 on your first mortgage, you could figure out the amount you are allowed to borrow with a second mortgage using the following equations:

• $500,000 (house value) x 80% (mortgage limit) = $400,000 (maximum debt limit)
• $400,000 (maximum debt limit) - $200,000 (existing debt) = $200,000 (second mortgage limit)

Since another Canadian law stipulates that non-amortizing mortgages are limited to a maximum of 65% of the property’s value, if you are going the HELOC route, the HELOC portion of your overall mortgage debt cannot exceed 65% of your home’s value.

2. The terms of repayment

Much like a primary mortgage, when you receive a second mortgage loan, part of the agreement is that you must pay back this loan within an agreed-upon repayment period. Although the length of the period settled on may vary from lender to lender, it is common for the term to be somewhere between 5 and 25 years. 

In addition to complying with this repayment, it is also important that you learn and comply with the terms of the loan, which can also vary depending on who your lender is. For instance, certain lenders stipulate that you must pay a penalty fee if you repay your loan before the end of the term.

3. What happens in the event of a default

If you default on a loan secured against your home, such as a second mortgage, there is an order of priority that exists in terms of how these loans are repaid.

If a foreclosure occurs when you default, the loan that is top priority must be paid in full before any others. Since your primary mortgage was taken out first, it would be a top priority in this situation. After your primary mortgage is paid out in full, the remaining amount can be used to pay off the second mortgage, and so on.

How Canadalend Can Help You Secure a Second Mortgage in Canada

If you need some serious cash and have amassed equity in your home, Canadalend would be happy to help you secure a second mortgage so that you can take advantage of the many benefits of this loan.

By aiding you with such a loan process, we can help you do many things, such as lowering your bill payments, decreasing the amount of interest you pay on your debt, and locking in a fixed rate.

Whether you are interested in consolidating your debt, growing your investments, going back to school, renovating your home, or retiring, taking out a second mortgage can help with all of these things. We can ensure you get a loan that is well-suited to your particular needs.

Fortunately, we do not approach second mortgage approvals using the same method as big banks. Rather than meticulously focusing on all kinds of qualifying factors, such as your citizenship, income level, and credit history, we strictly concentrate on the value of your home and your outstanding loans. 

In doing so, we make the application process as easy as can be, which paves the way for streamlined results and ensures you get the money you need when you need it. 

For more information on the benefits of getting a second mortgage through us or to learn about our loan approval process, call Canadalend at 1-844-586-0713 or contact us here.

Buying a home is one of the most exciting things you may ever do, and looking at homes for sale in search of one that matches your hopes and aspirations can be incredibly fun.

On the other hand, once you have to start applying for a mortgage to afford the house of your dreams, that fun tends to fade into the background and is replaced by many tedious steps that must be taken.

Unfortunately, this is where things begin to really slow down. There are a number of predictable delays once the loan application process is initiated, especially if you are dealing with a traditional lender.

One of the main factors contributing to this delay is that most traditional lenders require a substantial amount of documentation to assess your financial stability, such as a credit report and proof of your income going back years.

Such lenders also often require an official appraisal on the house you intend to buy to ensure its value aligns with the loan amount. The underwriting process that ensues, during which the lender must evaluate the risk of approving the mortgage, also takes time, especially if there are discrepancies in your financial information, such as recent changes in employment income.

How Private Mortgage Lenders Can Advance Your Home-Buying Process

Dealing with significant delays when you are trying to get approved for a mortgage and purchase a house can be extremely frustrating. It is particularly stressful when you are competing with other buyers who have also put offers in on the same house.

Although there is, unfortunately, no way to get around these delays when you are going through a traditional lender to get a mortgage loan, dealing with private mortgage lenders can make a big difference in speeding up this process. The following are some of the main ways a private mortgage lender can expedite your home-buying process:

1. Flexible lending criteria

Unlike traditional mortgage lenders who want to see extensive documentation of your finances, and are focused on credit score and whether you have a consistently  documented high income over the years, private mortgage lenders have more flexible lending criteria.

The main focus for most private home loan lenders is your equity and your ability to repay the mortgage. This is why they are generally willing to look at factors beyond your credit score or income.

Private home loan lenders can speed up the home-buying process because it often means you do not have to spend as much time collecting and arranging documents for submission. Also, you do not have to wait for those documents to be verified and considered.

The mortgage-approval process can be especially slow when dealing with a traditional lender if you have a unique financial situation such as self-employed income, or if you have a poor credit score. Thus, it often takes extra long for traditional lenders to consider the risks of underwriting your mortgage.

You may also be turned down by multiple lenders before finally finding one who will approve your mortgage, wasting more time. You may even have to wait until you can correct your credit score before getting approved, which could take years.

However, when you work with a traditional lender and boosting your credit score is not necessary for approval, getting approved for a mortgage will not be held up by this.

2. Simplified application process

In most cases, private mortgage lenders have more streamlined mortgage application processes compared to traditional banks. This is because there is much less time-consuming paperwork to complete and fewer bureaucratic hurdles to overcome. A major component of this is a reduced regulatory burden for private lenders.

While traditional banks often have to follow strict procedures to fully adhere to regulatory requirements, private lenders face much fewer restrictions, making things less complicated. With less rigid approval criteria and fewer layers of review, it is often easier for private mortgage lenders to approve mortgages faster.

3. Streamline your mortgage search

It is usually tedious and time-consuming to seek out the right mortgage for you. Doing so usually involves a seemingly endless amount of paperwork and negotiations with different lenders.

However, when you work with an independent mortgage broker, they will do much of the legwork for you, from comparing terms and mortgage rates to managing the application process. Thus, they make it more convenient for the homebuyer, while also removing unnecessary stresses.

In addition, dealing with an independent mortgage broker means working with a seasoned professional with a deep knowledge of the mortgage market and industry trends. So, if you feel overwhelmed and you have questions, your independent mortgage broker can offer expert guidance.

With their professional insights and guidance, you can make faster and more decisive decisions regarding a mortgage agreement that works for you.

How Canadalend Can Help Speed up the Home-Buying Process 

If you want to avoid multiple delays throughout the home-buying process and possibly risk losing the home you want because of these delays, Canadalend can help you access private mortgage lenders. They will expedite your home-buying process so you can quickly get the home you want.

Even if you have a unique financial situation or a poor credit score, we will help bring a mortgage approval within reach and ensure you get access to the best possible mortgage rates.

The investors we work with have more flexible lending approaches so that you can avoid having to deal with the stringent, drawn-out approval processes that most major banks would put you through.

Our team of mortgage experts can guide you through this process, answer your questions, and provide information to relieve your doubts. We are dedicated to providing 5-star service and will even set you up with an appointment for a consultation that is 100% free so that we can get you closer to finding a mortgage that suits your needs.

For more information about how we can set you up with private mortgage lenders, or to learn about our various mortgage solutions, call Canadalend at 1-844-586-0713 or contact us here.

A second mortgage (also known as a home equity loan) is a type of loan that you can take out on a home that you already have a mortgage on, and in which your house is used as collateral.

When you take out a second mortgage, you are essentially borrowing against the portion of your home that you own by accessing the equity you have amassed in it by paying off your first mortgage over time.

For instance, if your home is worth $500,000 and you have paid off 20% of this amount so far, you have $100,000 in equity. Your bank may allow you to access a portion of this equity to use for various purposes, such as paying for home renovations or consolidating credit card debt.

There are various types of second mortgages that you can apply for in order to access your home equity. For instance, a lump sum second mortgage allows you to access a single amount of cash all at once, which you can then pay back gradually through monthly payments.

You can also get a home equity line of credit (HELOC) that allows you to draw on the loan whenever you need it, and repay the amounts you receive the same way you would pay off a credit card.

The Main Pros and Cons of Taking Out a Second Mortgage

There are a variety of situations that encourage people to consider taking out a second mortgage, as it is a common way to access a substantial amount of cash in a short amount of time. However, before you do so, you should consider the pros and cons of taking out this type of loan.

The Pros

To begin, let’s take a look at a few of the biggest pros of taking out a second mortgage, which are as follows:

1. How you use it is up to you

One of the biggest advantages of taking out a 2nd mortgage loan is the freedom to use your home equity however you please. There are many situations to which people can apply the funds from their second mortgage payout, including the following:

• Debt consolidation: A second mortgage is a fantastic way to combine multiple debts under a single loan with affordable monthly payments. If you have unsecured debts, such as credit card debt, getting a second mortgage is an especially good idea.
• Pay for a large purchase: Whether you are planning on returning to university or would like to renovate your home, getting a second mortgage will allow you to cover significant expenditures that you cannot otherwise afford.
• Pay for everyday expenses: If you are getting overwhelmed by your bills, or are faced with some sizable emergency expenses due to an accident of some type, a second mortgage can alleviate that financial stress by granting you access to the funds you need.

2. Low interest rates

Another major benefit of taking out a 2nd mortgage loan is that you can access relatively low interest rates. This is especially helpful if you are using your second mortgage to consolidate your debts, as the interest rates are much better than those for unsecured loans.

For instance, most credit card companies charge between 20% and 26% interest, but the average second mortgage loan interest rate is currently between about 5% and 12%, depending on the type of loan you get.

3. Flexible payment arrangements

Most of the time, when you take out a second mortgage, you can extend your amortization period, which is the length of time you have to pay the loan back. With this kind of flexibility, you can customize your monthly payments to align with your income.

The Cons

Now, let’s take a look at some of the most significant disadvantages of taking out a second mortgage.

4. Most of tRisk of foreclosure

One of the biggest cons of taking out a second mortgage is the risk of foreclosure. Since a second mortgage is a secured loan that uses your house as collateral, if you fail to stay on top of your second mortgage payments, your house could be in danger of foreclosure, meaning your lender will take it from you and sell it to pay off your remaining debt.

5. Strict qualification criteria

Another downfall of taking out a second mortgage is the strict qualification criteria often required in order to be approved. Most lenders have requirements pertaining to your income, credit score, and debt-to-income ratio, which you must meet to qualify. You may be up against some exceptionally high standards, especially if you are trying to secure this type of loan from a major lender.

6. Fees

There are a few different types of fees that you typically incur when you take out a second mortgage. These include appraisal fees, legal costs, title insurance, and title search expenses.

How Canadalend Can Help You With the Second Mortgage Process

If you have weighed the pros and cons of a second mortgage and have decided that the advantages outweigh the disadvantages, Canadalend can help you connect with second mortgage lenders to ensure this process goes smoothly.

Whether you want to consolidate debts, pay for an addition to your house, or put your kids through university, securing a second mortgage loan through us can make your goals a reality. Our mortgage experts are happy to guide you every step of the way. 

We have access to a variety of second mortgage lenders in Ontario. Many of these lenders do not require income or credit qualifications, which means we can help set you up with an easy and expedited loan application process. 

We understand that everyone’s financial situation is unique, which is why we do not mind tailoring our services to meet your specific needs. When you contact us, we will schedule a free personal consultation to assess your needs and match you with a suitable solution. We will go over all of your second mortgage options with you and answer any questions or concerns you may have during this process.

For more information about how we can set you up with second mortgage lenders, or to learn about the various mortgage solutions that we have to offer, call Canadalend at 1-844-586-0713 or contact us here.

As a first-time homebuyer in Canada, finding your first mortgage can be a daunting task that requires you to be laser-focused when making decisions that align with your financial goal.

In Ontario, the housing market is very competitive. As such, this requires finding the best mortgage lender to help you finance the home you want, even though your credit score is low or your loan application has been previously rejected by traditional banks due to a lack of equity and/or unappealing credit history.

These situations make it essential for first-time homebuyers to find the best lender who understands their current needs and financial situation.

This blog discusses how private mortgage lenders can help you navigate the housing market, offering the best rates to make your home-buying journey in Ontario seamless and successful.

Understanding Private Mortgage Lenders

Private mortgage lenders are corporations, individuals, or syndicates that are not regulated the same way as financial institutions. They provide flexible loans secured by real estate that are curated to consider a wide range of applicants, including those with low credit scores, limited credit histories, and unconventional means of income. 

The major difference between private money lenders for real estate and traditional banks lies in their lending criteria and approval processes. 

Traditional banks, and other related financial institutions, have standard requirements that always entail high credit scores and substantial down payments.

In contrast, private money lenders for real estate assess each mortgage loan application on a case-by-case basis, as applicants always have different needs and financial situations. These lenders offer more personalized and lenient terms.

For first-time homebuyers in Ontario, private home loan lenders can be the best part to securing your home. We will explore the unique benefits below.

Why choose a private mortgage lender?

The most rational question would be, “Why do I need a private mortgage lender?” These loan corporations offer lots of benefits, especially for first-time homebuyers, including the following:

• Flexible loan terms: Private home loan lenders are not bound by the stringent traditions adhered to by traditional banks and other financial institutions, thus allowing them to tailor their offers to suit the specific needs of each borrower. 
• Fast approval process: Unlike banks’ slow methods, private mortgage lenders can easily expedite loan approval processes to enable you to secure the finances that you need quickly and to leverage time-sensitive housing deals. This benefit is important, especially when considering the Ontario market, where property sells quickly.
• Personalized approach: Private mortgage lenders take time to understand your current circumstances and financial goals in a bid to offer a customized loan solution that traditional banks may not provide. 

In a scenario where a group of self-employed individuals with irregular income patterns and a history of loan rejections are keen to secure a home, their best bet to achieve this is through a private lender. Reputable private mortgage lenders are willing to consider such situations, and have a laser focus on a broad financial view rather than just credit scores.

Key Factors to Consider When Choosing the Best Private Mortgage Lender

There are several factors to think about when looking for the best private mortgage lender, such as the following:

• Reputation and reviews: You should always look for reviews and testimonials from previous first-time homebuyers to have an insight on what their experience entailed. Comments on online review websites, recommendations, and ratings from financial institutions can offer unfiltered views on credibility. Remember, a private lender with a strong reputation and a high score of positive reviews can provide peace of mind during negotiation processes.
• Interest rates and fees: Comparing interest rates and understanding hidden fees will help in the decision-making process. Private mortgage lenders’ rates are indeed higher compared to governed financial institutions. This rate varies from lender to lender, hence the importance of obtaining quotes from multiple sources.
  
  Additionally, you should always ask questions about the fine print of hidden fees or charges that you do not understand, as they could always increase the total cost of the mortgage loan.
• Loan terms and conditions: Private mortgage lenders always offer flexible and customizable loan terms. However, it is always essential to cross-check these terms. Check for due repayment dates, late payment penalties, and other conditions. A lender willing to tailor loan conditions to fit your needs could be the leverage you need to secure your first home. 
• Customer service: Reliable and effective customer service support is often the least considered factor until an issue arises. Private mortgage lenders must be willing to readily answer your questions, provide transparent guidance, and address raised concerns for a seamless experience.
• Transparent communication and pledges: Clear communication from lenders cannot be overstated. You must always ensure that the private lender is transparent on all aspects of the loan term, including the approval process, fees, repayment conditions, and more.

Considering these factors enables you to find private mortgage lenders that align with your needs and financial status, thus making the journey to homeownership more manageable.

Common Mistakes to Avoid

When researching for the right private mortgage lenders, first-time homebuyers should be mindful of the following mistakes to avoid:

• Focusing on interest rates and ignoring other factors: While interest rates are an important aspect of a mortgage, they are not the only factor to consider. Focusing only on rates can lead you to ignore some essential elements such as loan flexibility, lender’s reputation, and customer service. A slightly higher interest rate from private mortgage lenders who offer better terms on these factors may be the best choice for both the short and long-term basis. 
• Overlooking additional costs: Many homebuyers prioritize other factors, including interest rates, and forget to consider the additional costs and fees associated with the loan term before signing a commitment.
  
  These costs include application fees, appraisal fees, closing costs, and other charges that can increase the overall total of your loan package. Be sure to request a detailed breakdown of costs, and factor them into your decision-making processes. 
• Not asking questions: Navigating Ontario’s housing market requires the utmost focus. When researching or negotiating with private mortgage lenders, pay attention to details on payments and clauses that may affect your financial situation in the future. If anything seems unclear, do not hesitate to ask questions.

Let’s Walk the Path to Homeownership Together

Finding the right private mortgage lender is important for first-time homebuyers to ensure a smooth and successful home buying experience. The right lender can offer flexible terms, personalized service, and faster approval processes, making homeownership more accessible. 

If you’re a first-time homebuyer looking to make your dream of homeownership a reality, Canadalend is your top choice. 

As a leading and trusted private mortgage lender in Ontario, we are committed to helping you find your way through the complex housing market and provide the best rates and terms through our team of experts and efficient customer support system. 

For more information about our private mortgage lenders, call us at 1-844-586-0713 or contact us online to obtain the best rates and terms today.