Tag Archives: mortgage

Should You Take Out a Second Mortgage?

May 25, 2022 The Silo Leave a comment

With housing prices cooling off a bit but still generally soaring in cities across Canada, many homeowners are asking themselves how they can cash in on the market without actually having to sell their property. For many, a second mortgage will be the ideal way to do so.

Second mortgages are one of the perfect mortgage solutions for homeowners who want to tap into their home equity to get lump-sum cash payments at low rates of interest. If you want to know if a second mortgage is right for you, here are three questions you should ask yourself.

1. How Much Home Equity Do I Have?

Before you start approaching mortgage brokers about a second mortgage, it’s a good idea to do some calculations around home equity, as the amount of money available to you through a second mortgage is determined by how much home equity you have.

Fortunately, home equity is easy to calculate: simply subtract your existing mortgage from the current market value of your property. The difference is your home equity — the amount of your home value that you own outright.

If you don’t know how much your home is worth, you can use a free calculator like this one to get a general estimate based on the going rate for properties in your neighbourhood.

2. Should I Get a Home Equity Loan or Refinance?

Generally speaking, there are two ways a homeowner can cash out a percentage of their equity: through refinancing or through a second mortgage. Both can be good ways to unlock capital, but which option you go for will depend in part on your financial situation.

Refinancing: When you refinance your home, you replace an existing mortgage loan with a new mortgage loan. This new loan can be negotiated to include a cash payout based on your home equity, and while cashing out will likely extend the time it takes to pay off your mortgage, you will still only be dealing with a single mortgage loan.
Second Mortgage: A second mortgage is an additional mortgage loan taken on against your home equity. Because it is an additional loan, it will usually come at a higher interest rate.

In Canada, most mortgages are refinanced every five years, but they can also be refinanced more frequently. But if you already have a low interest rate on your existing mortgage and rates are increasing, a second mortgage may be the cheapest way to turn equity into cash.

3. Will this Loan Save Me Money?

A second mortgage can be a powerful financial tool, but it isn’t free money: you will still need to pay it back with interest, so you should be careful about how you use it.

Taking out a second mortgage to consolidate debt, or to build an addition on your house, are smart investments because they put your money to work by reducing your interest payments or enhancing the value of your property. This puts you in a better financial position than you would have been if you didn’t borrow the money.

Doing a cost/benefit analysis and working out how much money borrowing against home equity will save you is the key to making a strategic decision.

Given how much real estate values have gone up over the past few years, figuring out how you can use your newfound wealth to improve your financial situation is essential for good money management. If you want to know more about whether a second mortgage is right for you, get in touch with a local mortgage broker to explore interest rates and options.

Feautured image: Precondo CA Via Unsplash/ Silo Content Production

Finance

Why Everyone Should Strive To Pay Off Their Mortgage Quicker

September 30, 2021 The Silo Leave a comment

Lots of people struggle to get a mortgage in the first place. It’s especially hard now because homes are so expensive. You start to think you’ll be paying off your mortgage for the rest of your life.

Luckily, your finances will probably improve considerably over time. When they go up you should look into paying your mortgage early. Let’s look at some of the top reasons why it’s something you should aim for in the future.

Extra Money To Enjoy Yourself

If people need to take out bad credit loans in Toronto, ON, they won’t have lots of disposable income. When you don’t have great credit you can’t enjoy yourself, but that’s not the case when you’re older.

When you have more disposable income after paying off a mortgage, you’ll have much more money to spend on luxuries. If you need to keep paying a huge chunk of your income towards a mortgage your life won’t be as fun.

Saving Lots Of Money In Interest

Once you walk into Clover Mortgage Brokers in Toronto & GTA, they’ll let you know how much you can spend on a home. But it’s going to be a lot more over the lifetime of the mortgage due to interest payments.

When you pay interest on a loan, it makes up a big chunk of your monthly payments in the beginning. The amount of interest you pay drops over time, but if you pay off the mortgage early you’ll no longer have to pay it.

Why Choose a Mortgage Broker in Canada? | Hatch Mortgages

It Eats Into Any Debts You Have

Over the course of a lifetime, couples can generate a huge amount of debt. College tuition, car payments, and credit cards can sometimes be quite high. These debts won’t disappear once you pay your mortgage.

Fortunately, once your mortgage is gone you’ll be able to focus 100% of your efforts on your other debts. It will take you one step closer to becoming debt-free, so you’ll have one less thing to worry about.

A Mortgage Is A Secured Loan

When you take out a mortgage it’s classified as a secure loan, which means when you don’t pay the loan they’ll be able to take your home away. In a perfect world, you’ll have as few secured loans as possible.

You could pay a credit card instead of a mortgage, but it would mean they could take your home. Even though you won’t miss your credit card payments, they couldn’t take your home even if you did completely ignore them because a credit card isn’t classified as a secure loan.

It’s Easier To Enjoy Retirement

Nobody should have to pay debts when they’re retired. Sadly, so many people are struggling now, so it’s much more common than you think. It will eventually start to hurt your mental and physical health.

How can you enjoy retirement if you’re always worrying? Maybe you’ll even have to stay on at work because you can’t afford to retire. Pay off your mortgage to ensure you don’t have any stress when you retire.

Debt Isn't About Right Or Wrong - It's About Freedom

Don’t Leave It Too Late

Nobody is saying you should try to pay off your mortgage as soon as possible, but it’s something you’ve got to start considering as the years go by.

Culture

Pros And Cons Of Condo Living

September 28, 2018 The Silo Leave a comment

If you are considering taking your first steps onto the property ladder, you basically have a choice between purchasing a condo or purchasing a house. Which is right for you depends on your circumstances and wants/needs.

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A condo encompasses more elements of apartment living which can have both its benefits and drawbacks, and it is important to weigh these up before you make a final decision and take on what is a huge financial undertaking. Why not check out the Mirvish + Gehry condo complex to see an example of what’s on offer and then come back here to find out more about the pros and cons?

#1: No Mowing the Lawn

One of the biggest pros of living in a condo is that there is very little to look after aside from the general cleanliness of your home, and even then, there’s not a whole lot of that in comparison to a house. Less square footage means less cleaning and no garden means you don’t have a lawn to mow, a garden to tend to or a roof to repair when things start to go wrong. This leaves you with more time to do things which you truly enjoy.

#2: A True Sense of Community

When you are living in a condo building, there’s a true sense of community between you and your fellow residents, especially when there are communal areas such as lounges and game rooms. This is much better than living in a street where people keep themselves to themselves and don’t get involved with each other. You will make more friends and develop relationships.

Community meet up in condo elevator — Image- liherald.com

#3: It Can Be Quite Noisy

The obvious downside to living in a condo vs. a detached house is the noise factor. When you live in a condo, you are adjoined to other people’s homes and sometimes there can be problems arising due to noise. Although modern condo buildings have good sound insulation, it’s not perfect and this is an important consideration if you are somebody who doesn’t like the slightest bit of noise from other people.

#4: You Can’t Choose Your Neighbours

Although you can’t pick your neighbours with a house, it’s easier to avoid them. When you live in the same block as neighbours whom you don’t like, avoiding them can be difficult as you are forced to share certain parts of the building with them. Although there can be a great sense of community, this can work in the other direction and be more of an inconvenience than anything else.

When it comes to deciding between buying a condo and a house, the decision can be very hard to make. It requires a lot of careful thought before you dive into it – you’ll probably be living in your condo for several years and it’s important to make the right choice. There are many other pros and cons associated with living in a condo vs living in a house, so before you commit to anything, carry on doing your research. For the Silo, Dimitry Karloff.