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You want to consolidate debt. A second mortgage can be used to pay off your high-interest debt (like credit cards and student loans) so you can focus on paying back a single loan at a potentially lower interest rate.
You need to borrow for a major purchase. Say you need to fund a renovation or pay for your child’s education. With a second mortgage, you can use the equity you’ve built in your home to pay for big-ticket items you may not otherwise have the cash for.
You want to buy a second property. This could be a cottage, a vacation home or an investment property. Whatever it is, a second mortgage can help you purchase it.
- For second properties a down payment of at least 20% is required for a second mortgage.
- If you or family members are going to live in the second home rent-free, you can pay less than 20% down payment.
- The Canadian Home Buyers Plan, which allows you to tap into your RRSPs, doesn't apply on a second property.
- Costs are much the same as your first purchase: valuation fees, legal fees, and registration fees.