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Second Mortgage: Student Loans for Those Rejected For OSAP

The main benefit of taking out a second mortgage instead of applying for student loans is the cost difference. Paying off student loans and mortgages are two of the most expensive payments Canadians deal with on a monthly basis. Therefore, it is in your best interest to have the lowest rates as possible.

Second mortgages have a significantly lower interest rate than student loans. Nowadays, student loan rates average around 6-7%, and you can get a second mortgage with an average interest rate of 3-4% By taking out a second mortgage instead of a student loan, you could be saving hundreds, if not thousands of dollars.

Another benefit of using a mortgage to fund education is that you will receive a reduced number of payments. Student loans can be distributed by multiple different lenders, which means you will have to make multiple different payments every month. If you take out a second mortgage, you will only have to focus on paying off your first and second mortgage, which decreases your chance of missing a payment.

Second Mortgage Requirements

In order to obtain a second mortgage, you need to be sure and have enough equity in your home. If you have been making stable payments on your mortgage for years, odds are you have accumulated a lot of home equity. A second mortgage allows you to tap into a percentage of your home equity and you can spend that money however you’d like, such as paying for education.

Another requirement to get approved for a Brampton second mortgage is to be in good credit standing. Having a high credit score shows lenders you are financially responsible and can make payments on time. In addition, you want to be sure you have a stable income and that your loan balance on your first mortgage is not too high. The less debt you are in, the more likely you will be approved for a second mortgage.

Contact Us

For more information on how a second mortgage can pay for your education or pay off your current student loans, please contact the Lotus Loans & Mortgages team at 905-791-1100.

The Difference Between a Second Mortgage and Refinancing

If you have been in your home over a period of time and have made stable payments every month towards your mortgage, you most likely have enough equity in your home to refinance your first mortgage or obtain a second mortgage. Your home’s equity can build in one of two ways: the first is every time you pay towards your mortgage, your balance decreases and your equity increases, the second is by your home appreciating over time. Most homes appreciate over-time, which means the value of your home increases. If the value of your home is increasing then your equity is also increasing.

Having a significant amount of home equity means you can refinance your first mortgage or apply for a second mortgage. These options give you access to your equity, which can be used any way you would like, such as to pay off student loans or fund education. But what exactly is the difference between a second mortgage and refinancing?

To give you a better understanding, our team of experts with Lotus Loans & Mortgages, have listed the key differences between a second mortgage and refinancing.

Second Mortgages vs. Refinancing

These two options both supply a lump sum of money by gaining access to your equity. The more equity you have in your home, the more money you will be able to borrow. You could apply for a Brampton second mortgage if you have at least 10% equity in your home. This means you can access up to 90% of your home’s overall value with your first and second mortgage.

If you choose to refinance, you will need to have 20% equity in your home, which will allow you to access 80% of your home’s total value.

For interest rates, this is largely determined by how well the local economy is doing. If you wish to refinance, your rate is chosen by the best fixed or variable rates being offered on the market. If you choose to obtain a second mortgage, your rates could be the same as your first mortgage or could be as high as 10-15%. You will also need to be sure and have a good credit score. For a second mortgage, your score could range between 550 and 700, and for refinancing, your score should be between 650 and 900.

Contact Us

For more information on the difference between a second mortgage and refinancing, please contact the Lotus Loans & Mortgages team at 905-791-1100.

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