There was a time when people viewed a second mortgage as a form of emergency financing. The old paradigm was to treat the equity in a home as sacred so that the house could be passed down as a family asset, from one generation to the next.
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That was in an era, though, when families didn’t move a whole lot. One generation would pass away, and the next would remain close by in the same neighborhood, so one of the children would use the house to raise his or her own family. Nowadays, the world is much smaller. Many families see their children scatter all across Canada, and even across international borders to live in the US, Europe or other parts of the world, so having a house as an asset in your estate isn’t viewed as crucially as it once was. People are using the equity that they have built up in their homes for everything from extra liquidity (in the case for a reverse mortgage) to college tuition payments for their kids, luxury cruises, vacation properties or unexpected medical expenses in some cases.
Second mortgages make sense in some cases. In others, you might be better off taking a cash-out refinance, or opening a home equity line of credit (HELOC). Each option has its own pluses and minuses, such as the closing costs involved, the interest that you’re going to pay, and the amount (and the timing) of the money that you need in the first place.
If you live in Chilliwack, greater Vancouver, or elsewhere in British Columbia, and you’re looking for a second mortgage for any reason, consider talking to one of our experts at Amansad Financial. We’ll go over your personal financial situation and come up with a personalized recommendation. If you’re not sure how much you’re going to need to borrow, a HELOC might make more sense. You get approved for a certain amount of money, but you don’t take it out until you need it, and you don’t have to take it all out at once. If you end up not needing it, you don’t owe a dime. If it turns out that a second mortgage is the best idea for you, we will take a look at your credit and income situation and the value of your house and find the best lender to work with you. Different types of lenders specialize in different levels of credit, different mortgage sizes and different payment terms. Some people plan on paying the second mortgage back quickly, while others want to amortize them over 10 or 15 years.
We have helped clients take out second mortgage for just about every purpose that you can imagine. If you have a major financial need coming up and are looking at your equity as a possible source, give us a call. We’ll provide you with a free consultation and give you our best opinion as to your optimal course of action.