As a homeowner, there may come a time when you need access to extra cash for various reasons, such as home renovations, debt consolidation, or investing in another property. While there are several options available for obtaining the funds you need, one option that is often overlooked is a private second mortgage. Consider a second private mortgage with Tembo Financial, one of the leading private mortgage lenders in the Greater Toronto Area and Ontario.

A second mortgage with Tembo is a loan that is secured by your property and leveraging the equity you have in your home. When it comes to second mortgages, there are two main types: traditional second mortgages and private second mortgages. A traditional second mortgage is typically offered by a bank or credit union and is subject to strict lending criteria, such as credit score and income requirements. Getting approved for the additional capital of a second mortgage in this market is difficult, time consuming, and will require you to have relatively low debt, a high credit score, and stable employment.

Here are some of the advantages of obtaining a private second mortgage:

Home Renovations Can Help Increase Home Value For a More Profitable Sale

One of the primary advantages of obtaining a private second mortgage is that it can help you increase the value of your home for a more profitable sale in the future. By using the funds from the second mortgage to make improvements to your home, such as adding a new bathroom or updating your kitchen, you can increase your home’s value and potentially sell it for a higher price.

Pay Off High-Interest Debt

Another advantage of a second private mortgage is that it can help you pay off high-interest debt, such as credit card debt or personal loans. Since second mortgages typically have lower interest rates than other types of loans, consolidating your debt into a second mortgage can help you save money on interest and pay off your debt faster.

Improve Your Credit Score

Obtaining a private second mortgage can actually help you clear up any bad debt that you might have and can improve your credit score. This is important because your credit score is what lenders use to decide whether to give you a loan or even renew existing mortgages. So, by paying off any high-interest debt or bills that you have using the funds from the second mortgage, you can show lenders that you’re good at managing your money and responsible with your finances. This can make you look more attractive to traditional lenders in the future, which can help you get better terms and interest rates on loans. So, getting a private second mortgage not only gives you the money you need right now but can also help you set yourself up for financial success in the long term.

Buy an Additional Property While There Are Good Deals in the Market

Finally, a second private mortgage can also help you purchase an additional property while there are good deals in the market. This can be a great investment opportunity, especially if you plan to rent out the property or sell it for a profit in the future. A private second mortgage with Tembo allows you to avoid using your savings or line of credit to do this, and gives you added flexibility that is maximized by our fast approvals processes.

A recent article by the Globe and Mail outlined the increasing conservatism of the big 5 banks in issuing new mortgages, highlighting the important role private lenders like Tembo will play to provide folks with options. A recent article reports on the projected slower mortgage growth rates for Canada’s big banks in 2023. According to the report, several factors such as rising interest rates and stricter mortgage rules are contributing to the anticipated slowdown. The article notes that while the big banks have traditionally dominated the Canadian mortgage market, the slower growth rates are expected to provide an opportunity for smaller and alternative lenders to gain market share, particularly in areas such as private lending and non-prime mortgages.

The article points out that the slower growth rates are likely to have a significant impact on the housing market and borrowers, who may have to contend with fewer options and higher interest rates. Additionally, the article notes that the COVID-19 pandemic and its impact on the economy and housing market may further exacerbate the situation.

Despite the slower growth rates, the article emphasizes that the big banks are still expected to maintain strong profitability due to other areas of their businesses. However, the banks may need to adapt to the changing market conditions and consider new strategies to maintain their dominant position in the mortgage market.

Overall, the article provides insights into the projected mortgage growth rates for Canada’s big banks in 2023 and the potential impact on borrowers and the housing market. While the slower growth rates present challenges, they also provide an opportunity for smaller and alternative lenders to gain market share and for borrowers to explore new options for obtaining mortgages.