A private 2nd mortgage is typically required because of the need for fast cash, bad credit, or some combination of the two.
The most common form of short term bridge loan or bad credit mortgage is a private second mortgage.
The reason for requiring the funds for a private second are basically limitless and without restriction. A private 2nd is effectively a home equity loan that will typically be for a one year term with an option to renew in some cases.
Probably the most common utilization of a Toronto private second mortgage is in the form of a debt consolidation loan where it makes sense not to do a mortgage refinance of the first mortgage in order to maintain its interest rate, but still provide added funds through a higher priced private mortgage to pay down still higher credit card balances or other short term debts that can’t be covered off or services with the existing cash flow.
Even for people with good credit, its not uncommon for them to utilize a private 2nd mortgage to finance renovation and construction loans due to the speed in which they can be put in place and the more straight forward and predictable draw administration process of a private lender compared to that of a bank or institutional lender.
The main thing to remember about a Toronto private second mortgage is that it is a short term bridge financing solution that basically buys you time to either generate enough cash flow to pay down the mortgage balance or improve your financial and credit profile to a point where you can secure a lower cost financing solution with a bank or institutional mortgage lender.
If you’re in need of a Toronto private second mortgage or would like to better understand all your potential residential home mortgage options, we recommend that you give us a call and book a time to speak with a member of our team and receive an immediate free assessment of your options.