Chances to Get a Second Mortgage with Bad Credit

If you need funds quickly, but don’t have cash in the bank and can’t get a loan, borrowing on your property is a good next option.

In fact, getting a second mortgage in Toronto is usually cheaper than a loan because you are using equity in your home as security for the borrower.

Second Mortgage in Toronto

However, there are certain steps you can take to improve your chances of getting a second mortgage. If you have applied for a loan and been refused, you’ll know the reason why—and it’s most likely bad credit history.

First, use one of the three main online credit bureaus to find out what your credit score is. By checking out your credit rating, you should be able to pinpoint the problem and possibly fix it. For example, if you are weighed down with credit card debt, find a way of paying it off. Or, at the very least, increase your monthly repayments.

How to Take Out a Second Mortgage

Now, let’s take a look at the options. The first one is to take out a second mortgage, using the equity in your house as security against the second loan. If your bank or current mortgage lender won’t give you a second mortgage, then shop around. The best place to start is with a decent mortgage broker, who will have access to many different sources of funding, including online banks and financial firms.

When it comes to a second mortgage, 99 percent of the time you will pay a higher interest rate than the rate on your first (primary) mortgage. Your repayments will likely be higher, too. Don’t just take the first mortgage on offer. If the terms don’t work for you, such as a high interest rate or high payments, then ask the broker to seek out alternatives. You need to find a second mortgage that works for you and within your budget.

Finally, with this first option, you will likely be in the position of making two mortgage payments a month. That can stretch your finances and make covering your monthly expenses challenging.

Cash-Out Refinance Loan

The second option is to consider a cash-out refinance loan. This option is a new mortgage loan that replaces your current mortgage and, in addition, gives you the sum in cash that you want to borrow. The interest rate is going to be higher, and your monthly payments will be higher too. That means you have to think through this option carefully. If you suddenly lost your job, how would you make the second mortgage payments, as well as your day-to-day living costs?

If, after exploring every option for a second mortgage, you can’t find a lender, think about asking someone to co-sign your loan. This means that the co-signer will be responsible for the debt if you fail to make your payments.

Get the Facts Before You Borrow

Despite everything we’ve said above, you may find that the interest rates on the second loan are in fact lower, depending on the current interests rates and the economy.

Whatever you decide to do, check out the overall costs, conditions, and terms. And if something is confusing or doesn’t make sense, be sure to ask questions. At Northwood Mortgage, we will help you find that second mortgage in Toronto—even if you do have a bad credit rating.

source: northwoodmortgage.com

Owning VS. Renting: Which Is Better For You?

It’s quite common to get frustrated when renting. After all, you’re paying often expensive rent each month, sometimes even putting work into the property, and while it does cover your accommodation, once you move out you’ve got nothing to show for it. If you own your home however, your monthly mortgage payments are similar to paying rent except they are going directly towards your own home: your own investment. Once you own your home outright, it’s a huge asset, especially in a city with such a high and competitive real estate market.

 Many people, if financially able, would choose owning a home as the money they put into accommodation goes directly into the property, their own investment. There are, however, considerations to take into account whether renting or owning. Depending on your lifestyle, owning may not be right for you even if you do have the cash for a down payment.

In this article, we’ll take a quick look at some of the pros and cons of owning versus renting.

Owning

Advantages to owning a home include:

    Owning a home gives you a sense of stability and of ownership. Many people grow up imagining they will one day own property. If you want to settle and start a family, owning a home can give you the stability to do so.

    Buying a house is likely the largest purchase you will ever make. While it takes time to pay off a mortgage, a home is a good investment, one which you can also keep in the family should you choose.

    If you own, you have more freedom when it comes to renovations and home improvements. No more dealing with potentially difficult landlords.

    There are certain tax deductions you can make as a homeowner, such as deductions on property tax and on interest paid.

Potential disadvantages include:

    You will have to spend more money. Even though your mortgage payments may be the same or less than paying rent, there are still considerable expenses, especially in the first few years of home ownership. This can include such expenses as utilities, insurance, and property tax. Make sure you fully understand the expenses before you buy. A mortgage broker can help advise you in that regard.

    Having a mortgage and owning a home is a big commitment, both financially and timewise. If you plan on moving around or travelling a lot, homeownership may not be right for you.

Renting

Advantages of renting property include:

    Renting can give you more flexibility. Usually after a year long lease, leases change to month-to-month which can give you the flexibility you need if you are unsure of your future living situation.

    As a renter, you will not have to pay for many repairs as those fall under the responsibility of the landlord.

    Rent is often cheaper than a mortgage, and you don’t pay property tax.

While disadvantages include:

    You must obey the landlord’s rules, which may, for instance, forbid pets.
    There are limitations on the appearance of the home and home decor.
    Zero return on your investment.

If you are considering making the move from renting to owning, consult a mortgage broker today. A mortgage broker can help you understand the market and assess your financial situation to help you determine if owning is right for you. Contact one of our mortgage professionals today to set up a consultation!

source: northwoodmortgage.com

Six Tips For Choosing The Best Mortgage Broker

If you are currently looking for a mortgage and have decided to enlist the help of a mortgage broker, then you’ve made a smart move. The next step is ensuring that you find the best mortgage broker. How do you do this? Gather as much information as possible and ask important questions. Here are some key things you should know about the broker, as well as the ways in which you can find this information.



    Judge by Experience

    The mortgage brokerage industry does have a fairly high turnover rate, so it is important to know how long the broker has been in business. This helps to determine if the mortgage broker is a seasoned professional who has been through hard and good times, as opposed to a newbie who has just come in.

    Ask About Mode of Compensation

    Brokers are generally compensated in two ways: fees and yield spread premiums. Fees are a percentage of the loan amount, while yield spread premiums are direct compensation for signing the borrower up for a higher interest rate than what they would have otherwise opted for. While the latter may be a bit controversial, they are actually suitable for borrowers who cannot afford the upfront costs associated with the loan. If you can’t pay upfront, then you pay over time. Ask the broker about yield spread premiums before signing anything.

    Ask About Rate Locks

    Rate locks are a way for some brokers to speculate on the rise and fall of interest rates—often at the borrower’s expense. Ask the broker about rate locks and how they handle them. However, to prevent the broker from doing any kind of speculation, it is best to get something in writing.

    Ask for References

    Ask your broker for references. If he/she has satisfied clients, then it’s best to ask them directly, and they will give you honest answers.

    Surf the Internet

    Do some background checking on the mortgage brokers. See what their credentials are and whether they are licensed and listed. There should be an online directory for registered brokers.

    Interview At Least Three Brokers

    You should have a shortlist of at least three mortgage brokers before deciding on the best one. Compare them and see which one you feel most comfortable with.

Deciding on a mortgage broker can be a detailed process, but making the effort could save you thousands or tens of thousands of dollars in the long run. If you are in search of a mortgage broker, then contact us today. Our specialists can help you find the best mortgage for you, and we will be more than happy to answer all your questions.

source:  northwoodmortgage.com

Mortgage Broker Vs Bank To Get a Mortgage

When purchasing a home, have you debated if you should use a Mortgage Broker or the bank? Today, we have Sheriza Shamshudin from Northwood Mortgage discussing this topic.  You will learn the key difference between the two to make a better decision.



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source: northwoodmortgage.com