The Advantages of Getting a Second Mortgage  

The idea of obtaining money from your property is very appealing one to a lot of people. But do you know that even if you’re paying for your mortgage, you can still take out another loan against it? This is called second mortgage and it may just be the solution to your financial woes.  Second Mortgage

Don’t be scared of the fact that you’ll be paying for two mortgages instead of one after you have decided to take advantage of the second lien. If you play your cards right, you might just give yourself and your family the financial freedom that you’ve always wanted. Below are the advantages of getting a second mortgage.  

  1. High loan amount

If you need a large amount of money fast, then getting a second mortgage may just be what you should do. The loan will be secured by your home, which is worth a lot. Because you’re using the equity of your home as collateral, it’s possible to take out as much as 80% of your home’s value. The actual amount, of course, will depend on the lender. However, that amount accounts both first and second mortgages.  

  1. Low interest rate 

While a second mortgage usually has a higher interest rate than the first one, it still costs less compared to unsecured personal loans. If you’re looking at all your options and you’re going to get a loan anyway, seriously consider the single digit interest rate of a second mortgage. 

  1. 3.Tax deduction

Certain second mortgages are eligible for tax deductions. To know more about this detail, it is best to talk to your accountant. If the money is used to do substantial improvements to your home, then you might just qualify for a tax deduction.  

  1. Lower Insurance Payment

You’re normally required to pay for private mortgage insurance when you take out your first loan. However, the second mortgage allows you to avoid this altogether. Those who lack a large down payment can use the second mortgage to be qualified for the first one. That way, they don’t have to pay for that expensive private mortgage insurance.  

These are just some of the advantages that you get to enjoy if you decide to get a second mortgage for your home. But along with these advantages comes the disadvantages from the other side of the coin. It also pays to know about these disadvantages so you can duly weigh whether a second mortgage is really for you or not.  

The Major Disadvantage of a Second Mortgage  

One of the major disadvantages of getting a second mortgage is the risk of foreclosure. Putting your home on the line would mean that the lender has the legal right to evict you from your home if you fail to pay. Surely, you don’t want that to happen.  

However, that is not going to occur if you put a lot of thought and tremendous planning before delving into it. If you think that you need more information in order to you proceed, it is strongly suggested that you talk with experts on 2nd mortgage Toronto to help you determine if this option works in favor of your best interest.