There comes a time for many people when they have additional, sometimes even unexpected, bills or events they need to finance. If you are currently a homeowner with a mortgage and you are facing a similar situation, Altrua Financial may be able to help!
By taking a deeper look into your current mortgage and financial situation, we can work with you determine the best option to help you come up with the additional finances you are in need of.
Using mortgage products to gain equity can usually be done one of two ways, either through a second mortgage or through refinancing your existing mortgage. Your particular situation will determine which of the two products would work best for you and your family.
This post will explain both options and highlight the differences between the two, to give you a better idea of what each one entails, should you be considering them as an option for your situation.
A second mortgage is exactly what it sounds like – taking out a second mortgage, in addition to the primary mortgage on your home. This is done by borrowing more money on the equity in your home as an additional loan, without making changes to your original mortgage.
Because a second mortgage is essentially a new loan, you will be required to start from the beginning of the process, starting with completing the application and submitting financial documentation. With some lenders, you may also be required to pay the fees associated with obtaining your mortgage, which will include the same fees you were required to pay to close on your original mortgage.
It is important to remember that should you obtain a second mortgage, you will then be responsible for paying two mortgage payments each month – one on your first mortgage and one on your second.
Refinancing, on the other hand, involves replacing your existing mortgage with an entirely new mortgage. This means that, again, you will have to go through the entire mortgage process and pay any associated fees to obtain this new loan, but you will still only be responsible for paying off one mortgage so you will only have one monthly payment.
Either option, a second mortgage or refinancing, can help you take advantage of lowered Kitchener mortgage rates, especially if they have dropped since you obtained your existing mortgage and you are currently paying a fixed interest rate.
If you are interested in finding out more about using the equity you have built up in your home to pay off unexpected bills or important events in your life, give us a call today to discuss your options! As Kitchener mortgage brokers, we are experts at what we do and we will help you make the decision for your situation when it comes to choosing between obtaining a second mortgage and refinancing.