I won't insult your intelligence today and tell you that getting a 2nd mortgage is easy. What I will do is speak the truth, and maybe even give you some insight into the banking system. You see, when I started out in the mortgage industry getting approved for 2nd mortgages was relatively easy. It seemed like the banks were happy to lend you the money. But nowadays money is hard to come by, especially if you have bad credit. Now it’s almost impossible to get a 2nd mortgage because the major banks are tightening their lending policies. Listen closely... Most major banks lend to borrowers based on two criteria: Your credit Your income In fact, Canadian banks have strict guidelines on what your minimum credit score has to be to qualify. To make it even worse, even if you have good credit you still need to meet specific ratios for income. Here is the problem.... Most homeowners don't have good credit. (If you did then you wouldn't need a 2nd mortgage in the first place.) With most banks you must have a credit score of at least 600 to get approved for a 2nd mortgage. It’s true. Just one point below their minimum requirements…and… you will be declined. No discussion, no debate. This makes it very difficult to qualify at the bank…even if you have enough income. Simply put, applying at the major banks for a 2nd mortgage is a waste of time if you don’t have good credit and you can't verify your income. Aren’t there banks that lend to people with poor credit? Sure, for the most part you can apply at secondary lenders. But they charge high interest rates and often have restrictive terms. Some even charge penalties if you try to pay off the loan early. These lenders penalize you with excessive fees and can be costly over the long run. How about some good news? Did you know there are 2nd mortgage programs in Ontario that will guarantee approval at a competitive rate…without a credit check or income verification? Let me share a secret: There are lenders who base their approvals entirely on your homes equity. As you know, equity is the difference between the value of your home and how much you owe your current mortgage lender. In most cases, you can get approved for a 2nd mortgage, regardless of your credit age and income. But what’s the catch? It’s actually quite simple. These lenders place a limit on how much they will lend. This is what is called the loan to value ratio (LTV). What does that mean? You can borrow a specific percentage of the equity in your home. In most cases the maximum (LTV) is 80%. Now let’s be perfectly clear If you do not have enough equity in your home you will not qualify. However, if you meet the minimum equity requirements you have a good chance at being approved…..even if your credit is terrible. In some cases you can even qualify if you have mortgage and tax arrears. Can you apply right now? You bet. It’s really simple and….you can get access immediately. But first, there is one more thing you ought to know. The program I'm about to reveal is not known by most homeowners. The reason you've never heard about it is because it's not available at any bank. It sounded strange to me too. But here's why. Most alternative 2nd mortgage programs are only offered by private lenders. In fact, there are only a few private lenders in Toronto that specialize in hard to place 2nd mortgages. If you have equity in your home, then I highly recommend that you learn about a new 2nd mortgage program now available in Ontario. It is called the (H.E.L.P.) home equity loan program. It is the single best way you can use the equity in your home... if you want to get a low rate 2nd mortgage fast without the hassles.
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I won't insult your intelligence today and tell you that getting a 2nd mortgage is easy. What I will do is speak the truth, and maybe even give you some insight into the banking system. You see, when I started out in the mortgage industry getting approved for 2nd mortgages was relatively easy. It seemed like the banks were happy to lend you the money.
Vaughn Chambers is author of this article on 2nd mortgage ontario. Find more information about second mortgage ontario here.
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