Private & Second Mortgages

Our guide to alternative financing

Struggling to secure traditional financing for your B.C. home?

A private mortgage or second mortgage might be the right solution.


Private mortgages and second mortgages used to have a bad rap thanks to shady lending practices, sky-high interest rates and a lack of regulation.


Things have changed.


At the Inspired Mortgage, we help home buyers access private funding from real estate investors. We work with a select group of private mortgage lenders to provide lending options for those who may be unable to access traditional lending products due to a poor credit history, irregular income or other factors.


Private mortgages can also be used to purchase or re-finance vacant land, commercial properties and farmland.

Unlock the equity in your home with a second mortgage.

The mortgage you already have is known as the first mortgage. That means if you should default on your payments, the lender who financed your first mortgage gets first dibs on the equity that's built up in your home.


A second mortgage is exactly what it sounds like — another mortgage on your home. If you let your home go into foreclosure, the second mortgage lender can only recoup whatever money is left over after the first mortgage lender gets their share back. This is why interest rates on second mortgages are significantly higher than on first mortgages.  Higher risk = higher interest rates.


Click here to get started or to learn more about second mortgages and private mortgages, read our guide below.


Private & Second Mortgages Guide

  • What is a second mortgage really?

    A second mortgage is a mortgage placed on a property which is already encumbered (mortgaged) with one mortgage. Determination of first, second, third mortgage etc is determined by priority of registration (time and date when it was registered against the property.) 


    What that means is if you have a first & second mortgage on your property – if for some reason you went into default – the mortgage in first position will recoup its money first followed by the second mortgage. The second mortgage would not get paid (or they would not recoup the loan they leant on the property) if there was not enough money to cover the cost of the first.


    That is what makes second mortgages more expensive (higher interest rates) than first mortgages because there is a higher risk for the lender.

  • How can a second mortgage help me?

    The need for second mortgages is growing and can help you access equity in your home without being forced to sell or pay a huge penalty when breaking your existing mortgage. Even if you are willing to pay the penalty for breaking, new government refinancing rules will only allow you to access up to 80% of the equity in your home. 

  • An example of a second mortgage?

    Sure, lets look at it this way:

     

    You need money for an emergency, a new roof, a daughter is getting married, you may have lost your job & with no income you can’t get approved at a bank. Your savings just aren’t going to cover everything. Your credit card bills might be piling up and you can’t seem to get ahead of them and with interest rates of 19.99% to 29.99% who could! You want to refinance your house to help increase cash flow & pay down debts but the term on your mortgage isn’t up for another 2 years & they want $20,000 as a penalty for breaking it so the math just doesn’t add up to make it worth it. You could access the equity as well if you were to sell your house but if you have a $400,000 home the costs can add up. 5% for realtors – another $20K plus GST, moving costs, land transfer costs ($4,000-$8,000,) lawyers’ fees, the breakage on your mortgage – $20,000 if you aren’t able to port it and that doesn’t even cover the cost of your stress & time trying to find a new home.

  • How does a second mortgage work?

    Through private lending we can help you with a second mortgage to keep you in your home & increase your cash flow. We can even get you a private second mortgage to help go towards your down payment to avoid CMHC costs. Maybe your credit needs help or you are self-employed and can’t get a mortgage with only 5% or 10% down. Second mortgages are generally interest only meaning if you have $20,000 worth of credit card debt you are probably paying a minimum of $600/month. With a second mortgage you would be paying $200 increasing your cash flow by $400 a month. Little to no income proof documentation is needed and we can usually have the money to you in 10 business days.

     

    To start the process we would need to establish how much equity you have in your home & this can be done with a copy of your existing mortgage (or home you would like to purchase plus what you have as a down payment) and an appraisal of your property.

     

    Once we have those 2 things you will need to meet with a lawyer so they can register the second mortgage on your property and you pick up your money.

     

    Terms are generally 1 year-long and are interest only payments meaning you are not paying down the principal amount on the second mortgage. Depending on your situation we can then help you refinance your home without all the costly penalties and roll or add back the second mortgage into one mortgage with better terms & interest rate.


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Resources to help you navigate mortgage financing and private lending.

What is a Second Mortgage?

A second mortgage can be an excellent tool that allows you to access some of your home equity without breaking your first mortgage. Learn more about how a second mortgage can be beneficial here.

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Alternative Lending Provides You With Options

Alternative lending provides you with mortgage options that fall outside the normal banking channels. Learn more about the choices you have available to you.

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Getting a Mortgage After Bankruptcy

If you’ve been through a bankruptcy or consumer proposal, there are several questions lenders will ask you regarding your financial situation. They'll want to know how long you’ve been discharged, if you’ve established new credit, how much money you have for a downpayment, and how much you make compared to how much you want to borrow.

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Reposition Your Debts Through Mortgage Financing

If you’re a homeowner looking to optimize your finances, consider taking advantage of your home’s equity to reposition any existing debts you may have.

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Credit and Mortgage Financing

Credit is the ability of a customer to obtain goods or services before payment, based on the trust that you will make payments in the future. When you borrow money to buy a property, you’ll be required to prove that you have a good history of managing your credit.

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How to Handle Missed Payments

If you’ve missed a payment on your credit card or line of credit and you’re wondering how to handle things and if this will impact your creditworthiness down the road, here’s the plan for you to follow.

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