As a new homeowner, you may be daunted by the terms used to describe mortgages, that is, the First, Second and Third Mortgage. The number before the word “mortgage” depicts the seniority of the title of the lease.
The Second Mortgage has a lower position after the First Mortgage. It is where a homeowner takes another mortgage on their already mortgaged property. This type of mortgage allows the owner of the property to borrow money from the equity remaining on their property.
On the other hand, a property owner can take the Third Mortgage on their property as a loan that is secured by the remaining property equity. In the event of a default of payment, the borrower has to give priority to the repayment of the First and Second Mortgage.
The borrower has to make monthly repayments on all the mortgages, simultaneously. Homeowners use the Second and Third Mortgage to consolidate their debt while leaving the First Mortgage intact. It can be an ideal source of an increase in cash flow.
If you are planning to take the Third Mortgage, as a homeowner, you should consider its feasibility. The first step is to determine your debt service capability. That is the ease of making the total monthly payments on all the mortgages.
Are you still undecided on whether to go for a Second or Third Mortgage? Contact our Mortgage Broker to learn more and guidance on your mortgage issues at 905-564-2266