The Second mortgage will go behind the current first mortgage on the property the mortgages will take security on. Some reasons people may choose to do a second mortgage are:
- Debt consolidation / Pay off creditors
- House / Cottage renovations
- Pay off property taxes that are in arrears
- Extra cash flow
- Bring mortgage arrears up to date
- Avoid power of sale
- Purchase a second property
- Start up cash for a business
- Weddings, Tuition etc.
Although second mortgages can help borrowers get out of tough situations, there are always additional costs to consider. Such as, higher interest rates, interest only payments, lender, brokerage, lawyer fees and appraisals. They are more expensive than traditional mortgages. So always be sure to consult your mortgage professional to see if doing a second mortgage is the right thing for you. It is also very important to have a plan of how to get out of your second mortgage, as they are only meant to be a temporary fix.