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Use Your 2nd Mortgage to Increase the Equity in Your Home
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Posted On :
Dec-25-2011
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Article Word Count :
531
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A 2nd mortgage in Toronto often comes down to how much equity a person has in their home. Two of the most common types of second mortgages are home equity loans and home equity lines of credit (HELOCs); and many homeowners know how much these loans rely on home equity. But there’s another element of home equity that homeowners should think about when taking out a second mortgage – and that’s making your second mortgage work for you, and to use it to increase your home equity.
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A 2nd mortgage in Toronto often comes down to how much equity a person has in their home. Two of the most common types of second mortgages are home equity loans and home equity lines of credit (HELOCs); and many homeowners know how much these loans rely on home equity. But there’s another element of home equity that homeowners should think about when taking out a second mortgage – and that’s making your second mortgage work for you, and to use it to increase your home equity.
When taking out a 2nd mortgage in Toronto in the form of a home equity loan or a HELOC, many homeowners only consider how much equity they have to borrow against. Homeowners are able to take out up to 80% of the equity they have in their home; that is, the amount they own outright and don’t have a mortgage against. However, it’s not generally recommended that homeowners borrow the full 80%, especially if they are using the second mortgage to increase the equity in their home. But what is that, and how can a homeowner do it?
Paying your mortgage payments regularly and making a large down payment are two of the most obvious ways to increase equity in your home; and it’s these two that most homeowners think are the only ways to gain equity in their home. But because home equity refers to the difference between the value of the home and the amount borrowed against it, increasing the value is another way to increase home equity. And increasing the value is easy to do with a 2nd mortgage in Toronto.
To increase home equity with a second mortgage, a homeowner simply needs to increase the value through renovations or remodeling projects that can now be done with the funds obtained from the loan. An extra bedroom will add value to a home, while completely redoing an entire kitchen from top to bottom will make a home’s value soar. When a homeowner is looking at using a second mortgage to increase the equity in a home, it’s important that they look at both what would add the most value to their home, as well as what their home needs the most.
When using a 2nd mortgage in Toronto to increase the equity in a home, a home equity loan is generally a better option than a home equity line of credit. This is because a home equity loan will provide a large amount of money at one time, which could be needed to pay deposits on contractors and sub-contractors, or purchase materials. Home equity loans also come with fixed interest rates so this type of second mortgage could be especially beneficial if repairs and renovations are being done at a time when interest rates are low.
Paying off your mortgage every month and making a large down payment at the time of purchase are great ways to put equity into your home – but they’re not the only ways. Use your equity to increase the value of your home and give you even more equity, and get your home working for you!
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Article Source :
http://www.articleseen.com/Article_Use Your 2nd Mortgage to Increase the Equity in Your Home_124206.aspx
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Author Resource :
Bryan J is the author of this article. For more information about 2nd Mortgage or second mortgage loans please visit canadianmortgagesinc.ca
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Keywords :
2nd Mortgage, second mortgage loans,
Category :
Finance
:
Mortgage
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