Second mortgage financing in Ontario is something that many homeowners use to raise capital to finance debt consolidations, home improvements and more. Refinancing your home and taking out a second mortgage is slightly more complex than taking out a loan or line of credit because they involve securing the loan against your home. Second mortgages offer many benefits. The three top benefits are they are often less interest, offer more flexible repayment terms and enable you to affordably borrow large sums of money. A second mortgage is a fabulous tool for taking out a large loan and well worth the slightly more involved process.

This first step in the second mortgage application process is you will have to make an application. It is important to check your paper work like your paystubs and house sales in the area etc. to ensure that the information you provide to your bank or mortgage broker is accurate. Over-estimating your income or property value could result in an approval but ultimately could cause your deal not to fund once your application goes into the verification process.

There is key information that must be disclosed when you apply for a mortgage. In addition to your income and property value having to be accurate and verifiable, your property must be owner occupied and must not be under construction. If it happens that your property is a rental property, is under construction or you cannot verify your income, it will change the nature of your financing. Usually institutional lenders like banks and finance companies will not want to finance these types of applications but with equity and a good Mortgage Broker you can sometimes secure financing under these circumstances from a private lender.

Once the application has been approved, if your second mortgage is not CMHC insured you will have to have an appraisal on the property. A property appraiser will come to your home to do an inspection and then issue a report to the lender that validates the value of the property. You will have to pay for the appraisal and the appraisal fee is paid when the appraiser attends your home.

After the appraisal is completed you will have to go to the lender or your Mortgage Broker to sign the preliminary paper work and will have to then provide any supporting documents that they require like your current first mortgage statement and income verification. We always recommend asking the lender or Mortgage Broker what supporting documents they will require before having your appraisal done. While they don’t need them until you sign your paper work, providing them in advance and getting them approved will ensure that you don’t face any surprises after you have an appraisal.

After you have signed all the paperwork, the paperwork is then sent to a lawyer so that they can prepare the final documents. You will have to attend an appointment at the lawyer’s office where you will sign the final documents. Then the lawyer will register the mortgage and you will be able to pick up your funds within 1-2 business days.

It takes about 2-3 weeks to arrange a second mortgage but is well worth the wait.