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Second Time Home Buyer

Second Time Home Buyer

Refinance Mortgage
second time home buyer

What Is A Second Time Home Buyer?

A second mortgage loan is a lien / charge registered on the title (deed) of a property in second priority, for the purpose of getting financing from the equity of a home. Second mortgages, have a term, interest rate, monthly payment, pre-payment penalties, maturity date and the same characteristics as a first mortgage.  Although there are similarities between first and second mortgages, in terms of framework, the term, interest rate, monthly payment, and features of a second mortgage differ greatly from a first mortgage.

Second mortgage rates are usually higher than first mortgage rates, as there is higher risk to a lender lending a second mortgage. Most lenders will have a set return on investment (ROI) they wish to have for their mortgage loan. The ROI yield is usually between 12% to 14%. In a second mortgage, for the investor, the ROI is comprised of the second mortgage interest rate, and a lender fee.

Second mortgage interest rates can range from 8.99% to 12.99%, depending on the loan to value and overall risk profile of the borrower. Second mortgage rates are determined by the overall risk factors to the second mortgage lender.

There are very minimal requirements for a second mortgage. Second mortgage approvals are based upon the equity available in a property. Second mortgage lenders require a minimum of 10% to 15% equity in a property.

Second mortgage process

Just like a first mortgage, the process to get a second mortgage is very similar, however there are different qualification requirements.  

  • Borrower(s) must apply for a second mortgage
  • Their mortgage broker will order a property appraisal from an approved appraisal company
  • Once the appraisal inspection has been complete, and the report provided, the broker can shop with second mortgage lenders to get a mortgage commitment
  • Upon the mortgage commitment being issued and signed by all parties
  • All conditions of the mortgage commitment must be satisfied, then the lender will send mortgage instructions to the borrower(s) lawyer
  • The borrower(s) then would arrange to meet with their lawyer to sign final second mortgage closing documents
  • On the date of closing, the lender will fund the second mortgage, once they are satisfied with all conditions

 

Getting a second mortgage

To begin the process in getting a second mortgage, first you will need to first consult options with a mortgage broker prior to submitting an application, to preliminarily understand what is involved in the second mortgage process, including costs.

After consulting second mortgage options with a mortgage broker, all borrower(s) must complete a mortgage application and provide valid government issued photo ID. The mortgage brokerage will then order an appraisal inspection and the borrower will schedule the inspection directly with the appraisal company. It is important for the mortgage broker to order the appraisal as it must be from a lender’s approved appraisal company.

Once the mortgage broker has received a mortgage commitment with terms, and an interest rate agreeable to the borrower(s), the borrower(s) will need to sign the second mortgage approval documents and fulfill all conditions required by the second mortgage lender. Second mortgage approvals traditionally don’t have income or credit qualification requirements. Upon all conditions being satisfied, the borrower will need to arrange to meet with his/her lawyer to sign and complete the mortgage, and receive any funds, should there be monies available from the equity take out.

 

We are always there for you to help making the right decisions for your 2nd mortgage.

For the last 15 years, We have been providing the communities of Ontario with flexible, trustworthy business and residential mortgages to make home and commercial facility accessible.
We will assist you in comprehending your financing possibilities and locating an affordable mortgage. We will walk you through the procedure and make it as simple and straightforward as possible.

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Proudly Serving All Areas Of Ontario

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