Owning a property is usually the single most important investment in a person’s life, and certainly one of the largest. Purchasing a home is not only a major life event – it’s also one of your best opportunities to gain equity in something tangible. When the thought of taking a second mortgage comes up it can seem daunting. The truth is that a second mortgage is a great idea under the right circumstances, and if you know when to take one out, you can gain an advantage when it comes to your finances. Here are some tips about when to get a second mortgage.
Are you at risk of penalties on your first mortgage?
If you are behind on your payments for your first mortgage or at risk of incurring penalties to refinance, then you might want to consider taking out a second mortgage. We all fall on hard times, and financial difficulties right now don’t always mean they will persist into the future. If you have equity built up in your home, then you can use it to help avoid getting penalized and give yourself some breathing room.
Is the housing market on the upswing?
The amount you can borrow with a second mortgage is linked to the value of your home. If the price tag has gone up because of a rising housing market, then now is the time to strike while the iron is hot. Your equity increases as the value of your home goes up. A higher home value will increase the amount that you can get and will give you greater flexibility.
Do you have a good use for the money?
Extra money is always welcome, but taking a second loan on your home makes the most sense when you have a tangible use for it. The best situations are when you have a chance to use that money to invest in something that adds value to your future. If you need to push your business forward and have a great opportunity to do so immediately, pay for your child’s education, or want to consolidate debt to avoid high interest rates and have one lower monthly payment, then a second mortgage could be your best solution. Each decision you make should have real financial goals in mind.
Decisions regarding large sums of money are never easy, especially when it comes to your home. Even though it can be enticing to use the equity you have built up in your home, you should carefully consider it as you should with any decision regarding your finances. If you are asking yourself about a second mortgage, contact us at (416) 225-6900 to speak to one of our friendly lending specialists to understand how a second mortgage loan can benefit you. At Tribecca Finance, we can offer the best second mortgage rates in Ontario, and have helped thousands of satisfied customers reach their goals.