Second & Private Mortgages

Our alternative financing guide.

Are you having trouble securing traditional finance for your home?

S second mortgage or private mortgage might be an option for you.

 

Though they used to have a bad reputation, as a result of high-interest rates and some lenders’ questionable practices, second mortgages and private mortgages have changed.

 

At Thrive Mortgage Co, we help our customers access funding privately through real estate investment. We work directly with a range of private lenders who are able to provide mortgage options in situations where standard products and solutions are not available, be it because of irregular income, poor credit history, or other reasons.

 

These mortgages can even be used to fund commercial properties, farmland, or refinance vacant land.

 

A second mortgage can unlock your home’s equity

Your first mortgage is the one you had first. As such, if you were to default on payments, your first mortgage lender will first be able to access the equity in your property.

 

A second mortgage, as the name suggests, is an additional mortgage on your existing home. If you are not able to repay your mortgage(s), the lender of your second mortgage would only get any equity that remains after the first lender is repaid from equity. For this reason, there is a much higher risk for lenders with second mortgages, and consequently, they incur significantly higher interest rates.

 

Click here to begin or take a look below at our guide to private and second mortgages.


Second & Private Mortgages Guide / FAQ:

  • What is a second mortgage?

    A second mortgage is exactly what it sounds like, a further mortgage on a property that already has an existing mortgage. Identification of the first, second, or third mortgage on a property is based on the registration date (when the mortgage was taken against the property).

     

    If you had two mortgages on your property and defaulted on payments for any reason, the first mortgage you have the priority in recouping its money from the equity in your home before the second. If there were not enough equity left to cover the second mortgage, the lender would not be repaid.

     

    This risk is why second mortgages incur a significantly higher interest rate.


  • How can I benefit from a second mortgage?

    Second mortgages are becoming more popular as they can enable you to access your home’s equity without having to sell or to pay any fee for breaking from your first mortgage. Even if you were happy to pay the fees related to breaking your first mortgage, you would only be able to access 80% of your home’s equity based on new financing rules.


  • When might a second mortgage be a good option?

    Let’s take a look at an example:

     

    You need some extra money. It could be that your daughter is getting married, you need to make repairs to your home, or even that you’ve lost a job, need some income and aren’t able to get a loan. Your credit cards are maxed out, and you don’t have any savings available. You could refinance your home, but you’re tied into your mortgage for another three years, and the fee for breaking would be $25,000. It just doesn’t add up. Could you sell your home to access the equity? Yes, but then you’d have to pay realtors fees, moving costs, solicitors, land transfer, GST and possibly still the breaking fee on your mortgage if you’re not able to port. All this is before even considering the stress and time taken to find a new home!


  • How would the second mortgage help?

    With our help, through private lenders, you can get a second mortgage to increase your cash flow while staying in your home. If you don’t have the best credit rating or are self-employed, you might not be able to get a mortgage with only 10% down. In this situation, it’s even possible to arrange a second mortgage for your down payment to avoid any CMHC fees. Second mortgages tend to be interest-only, which means you pay less every month. Credit card debt of $20,000 would mean paying back at least $600/month. Using a second mortgage you’d only need to pay $200/month, significantly increasing your cashflow. You won’t need a lot of documentation to prove your income and can typically have your money in a matter of weeks.

     

    To get started, we’d need to identify how much equity you have in your home based on a copy of a current mortgage statement and an appraisal of the property (or details of the home you are looking to buy and how much you already have as a down payment).

     

    With these, we are able to speak to a solicitor who will register the second mortgage against your property and transfer your money to you.

     

    Second mortgages tend to be interest-only, which means you don’t need to pay down the principal amount, and for a one year term. At the end of the term, we can assist with refinancing your home with the expensive penalties or perhaps even roll the first and second mortgages into one with better rates.


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