In case you already have a mortgage on your house and require urgent cash? Well, in that case, you can go for second mortgages in Alberta.
In case you already have a mortgage on your house and require urgent cash? Well, in that case, you can go for second mortgages in Alberta. It is both consecutive and subordinate to the first one. Second mortgage options in Alberta are also known as second-lien loans. In that case, one must have equity to take out a fresh loan against a property that already has a mortgage on it.
The second mortgage is a subordinate mortgage since you default on the loan and the property goes into foreclosure. However, the second mortgage should be paid off after you pay the first one. Honestly, a second mortgage sounds very tempting when you urgently need cash. However, it is important to be well aware of the pitfalls related to second mortgages.
In case you chalk out the payment, you can end up losing your home. This article points out the important things you should consider before taking a second mortgage.
Tips to Remember Before Taking a Second Mortgage
Well, first thing first, you should go for second mortgages in Alberta when there is no other way out. In case you are unable to pay the first mortgage, you should find out whether you can get refinanced instead of getting another loan. With a sound refinancing option, you can retain your share of equity in the property, and you might get the loan at a better deal.
You May Have to Pay High Interest
You should verify the terms of the mortgage very carefully. Well, in that case, the interest rate would be quite higher since the second lender does not have the primary claim on your property in case of foreclosure. The risk of a second mortgage is quite higher. In some cases, the lender of the second mortgage can buy the primary mortgage and then recover their money.
Be Aware of the Fee
You should keep in mind the fees and charges of a second mortgage. In fact, it can be substantial. You will require extensive paperwork and the lender should have a fresh appraisal of the property in order to evaluate its value and your equity. In that case, you should be aware of the application cost, legal fees, and appraisal fees.
Keep a Note of the Timing
Timing is a very critical factor when going for a second mortgage. The loan amount depends on how much equity you have in your house and that completely depends on the value of the house. If you find the housing market is not going well, you should wait for the price to go up. Like any other loan, interest rate plays a pivotal role in a second mortgage. In case you find a low-interest rate, it is the ideal time to take a second mortgage.
Wrapping Up
For further queries, you can take advice from a professional financial planner before taking a second mortgage in Alberta.
