Second mortgages can provide for extra cash when you need it and a regular loan is not an option.

Getting a stand alone second mortgages can be the answer.

Everyday, banks and other lending institutions are reducing the amount of money they are lending unsecured.  This means that when you need to get cash for something, more and more we are hearing our banks telling us "NO".

Instead of giving the client the best second mortgage loan they have, these banks and loan officers are trying to get clients to refinance their first mortgage from a very low interest rates into higher interest paying mortgages; this allows the bank/lender to increase profits through charging penalties and of course, higher interest rates.

For example, Bob and Mary own a home with a mortgage of $250,000 and they need to get $25,000 for some renovations that they want done. They visit their bank, and the bank tells them that they can refinance everything into one mortgage of $275,000 at their current rate of 5.00% and they can get the money they need at closing.  As a result of breaking their first mortgage the bank will charge them a 3 month interest penalty (approx. $3,125 - which is typical).  The bank can also charge a penalty by calculating the IRD.

A second mortgage at 7.00% can be cheaper than refinancing your first at 5.00%.

Most people that read the above statement would think "why would I take a second mortgage at 7.00% when I can get it at the same rate as my first mortgage". The answer is... IT CAN BE CHEAPER.  If, for example, refinancing bears a penalty of $3,125 (not including other costs) and getting a second mortgage doesn't because the first mortgage isn't being broken, then it might make sense to take the second mortgage.  There are multiple factors involved here and every situation is different.

Yes, the 2nd mortgage has a higher rate in this example, but, it's not comparing 7% compared to 0%, it's comparing 7% compared to 5%. The extra 2% is only on $25,000, which will cost an extra $1,216.32 in interest.  So, the total savings could amount to $1,908.68 (penalty - extra interest). That's money that Bob and Mary can keep instead of giving it to the bank.

Although second mortgages can be at higher rates than first mortgages, as you can see sometimes it makes sense.  Our mortgage agents can crunch the numbers for you and let you know which is the best option for you.

Apply today and let us help you in determining the best options available.