When you want to buy a home, you may consider a private second mortgage. This type of financing is a way to purchase a home without having to sell your current one. You can do this in a number of ways. However, you need to know the details so that you can make an informed decision.
For the first time in years, there are many private lenders active in the Vancouver real estate market. The lending industry has been growing by leaps and bounds. Some lenders specialize in the refinancing of existing loans, while others take a more agnostic approach and fund the purchase of rental properties.
While most people are familiar with the Vancouver property market, it’s not all about houses. As in other cities, there is an array of commercial properties to choose from. This is a testament to Vancouver’s status as a major hub for international business. Compared to the rest of the country, Vancouver mortgages tend to be on the high side. One home sold for $2.4 million in July.
With a growing number of lenders, the question is: How do you choose the right mortgage? A good mortgage broker can help you determine which financing option is best for you and your needs. If you are considering a purchase or refinance, call your Vancouver Mortgage Broker today for more information. You can also learn more about your options at the Vancouver Real Estate Association’s free home buyer seminar.
It’s no secret that the real estate industry is in a state of flux. While the government is trying to rein in lending, private lenders are lining up to cash in. In fact, there are two mortgage companies in West Vancouver that registered $4.47 million in mortgages against two homes. Despite the glut of competition, the rates for these loans haven’t gotten any cheaper.
Unlike in other cities, it’s not easy to find a second mortgage in the West Vancouver real estate market. Fortunately, there are mortgage brokers who are seasoned veterans of the industry who can help you navigate the maze of mortgage requirements. Whether you’re considering a new home or refinancing an existing one, you’ll be glad you took the time to find the best deal. From helping you choose the right mortgage to completing your application, your broker is here to guide you every step of the way. Your local expert will also know the best places to dine, where to shop, and what’s on the agenda for your next trip to West Vancouver.
The second mortgage is the most common type of home loan. It allows homeowners to use their own equity for renovations and other improvements to their home. Aside from that, it’s a great way to save on the high interest rates of conventional loans.
For instance, in the first quarter of 2019, the average mortgage rate for a fixed-rate mortgage was 9.8%. However, if you’re looking for the cheapest rate, you might be surprised to learn that a chartered bank could offer you a rate of only 3%.
On the other hand, if you’re looking for the best deals, you may want to consider private mortgage lenders. These are individuals who fund mortgages and are not subject to the stress tests that conventional lenders undergo. Their interest rates are usually higher than those of chartered banks, but if you’re lucky, you might be able to secure one at a reasonable price.
You can get a second mortgage, but it’s not the only way to fund a home improvement project. In fact, it’s not unusual for Canadian homeowners to have more than one loan against their property.
For instance, if you want to build up your property’s equity, you might want to look into a third mortgage. This can be used to pay for repairs or to purchase a rental property. As such, it’s a good idea to speak with a mortgage broker before taking out a second mortgage.
Depending on the circumstances, the best rates can be obtained through a chartered bank. However, if you need to buy a home quickly, you might want to look into a private mortgage lender. Fortunately, there are companies in the lower mainland that specialize in this area.
Aside from the standard first and second mortgages, you can also get a variable-rate mortgage and a home equity line of credit. Additionally, there are commercial mortgages available. If you’re looking for a mortgage in Vancouver, you’ll need to fill out an application and select the type of mortgage you’re looking for.
Whether you’re looking for a second mortgage or a home equity loan, a mortgage broker can help you save money and find the right type of loan for your situation.
Foreclosure as a last resort
If you are a second mortgage holder, you are likely to experience foreclosure. In fact, your chances are higher than those of a homeowner who does not have a second mortgage. Foreclosure is a legal process that allows a lender to reclaim a property.
The first thing a homeowner must do to avoid foreclosure is pay the balance on his or her loan. This usually means catching up on missed payments. However, it may also mean filing for bankruptcy. A borrower who can catch up can avoid a lengthy, costly foreclosure process.
Alternatively, the homeowner can file a deed in lieu of foreclosure. With a deed in lieu, the homeowner relinquishes ownership of the home to the mortgage holder. The lender can then sell the house at market value.
The deed in lieu process is less public than a foreclosure and provides an opportunity for a homeowner to keep the property. But, if the owner is unable to keep up with the payments, he or she will be evicted from the home.
Ultimately, a foreclosure is the last resort for a lender. It has a poor economic return. Not only is it expensive, but it can leave the borrower with damaged credit.
In addition, a foreclosure can take months to complete. Depending on the state and local laws, the legal process can take up to 18 months. During this time, a second mortgage holder can sue the homeowner, even if he or she is in a financial position to repay the loan.
The foreclosure process is highly complex. It involves attorneys, judges, and appeals. Many lenders will try to reach a solution that keeps the occupants of the house from being foreclosed.
Prolonged legal disputes can hamper the recovery of the collateral’s value. A bank has a right to foreclose if a loan has been delinquent for 150 days. During that period, a lender can also obtain an Order for Conduct of Sale.
A deed in lieu of foreclosure can release a homeowner from remaining balances on a loan, while a foreclosure destroys junior mortgage interests.
Alternatives to a second mortgage
A second mortgage is a great way to use the equity in your home to get cash for renovations, debt consolidation, and even purchase additional investment properties. However, it also has its downsides, so you should know what to expect before applying for one.
When you apply for a second mortgage, you will need to have your home appraised to determine its value. This will help you decide how much money you can borrow. It will also be necessary to consider the cost of the loan, since you will be paying interest on the new mortgage.
If you are not able to pay the second mortgage, you will risk losing your home to foreclosure. Fortunately, you have several alternatives available to you.
First, you may want to remortgage your first mortgage. By doing so, you can lower your monthly payment and make your life easier. The key is to take out a new loan with a better interest rate.
You can also sell your home. However, it is important to speak to a mortgage adviser before selling. That way, you can get the best possible price for your property and repay both mortgages.
You may also consider a second charge mortgage. This is a new loan, and often carries a higher interest rate than your existing mortgage.
One of the most popular alternatives to a second mortgage is a blended mortgage. With a blended mortgage, you can get a lower interest rate, and avoid prepayment fees.
Lastly, you can opt for a home equity line of credit (HELOC). These loans are based on the equity in your home, and you can draw from it as you need it.
Before taking out a second mortgage, you should shop around for the right lender. You should also meet with several different loan offers. Compare the terms of each loan to find the best one for you.
You will be able to use the proceeds of the second mortgage to finance a vacation, buy a car, or even pay for tuition. However, you should avoid using the funds for living expenses.
Among many other things, David A. Grantham is a contributing author to UmassExtension West Vancouver Blo. He is a renowned expert on real estate in BC.
Born in North Vancouver, Louisiana, Dr. Grantham grew up in Lower Lonsdale. He then went on to complete his business degree at the University British Columbia. As of this writing, Grantham has completed over 100 projects, including the development of a high rise building in Vancouver.
He is a husband, father, son, brother, and friend. He was a dedicated outdoorsman and enjoyed sports such as hunting, fishing, scuba diving, and snow skiing. His wife, Alison Grantham, and their two daughters survived him. He is survived by his wife Alison Martin Grantham and two daughters.