Welcome to the February issue of my monthly newsletter!
This month, I have all the details for you around second mortgages and understanding if they are right for you! Plus, scroll down for some spring-cleaning tips as we start to shake off the winter dust!
Understanding Second Mortgages: Are They Right for You?
One of the biggest benefits to purchasing your own home is the ability to build equity in your property. This equity can come in handy down the line for refinancing, renovations, or taking out additional loans – such as a second mortgage.
A second mortgage refers to an additional or secondary loan taken out on a property for which you already have a mortgage. Some advantages include the ability to access a large loan sum, better interest rates than a credit card and the ability to use the funds how you see fit. However, keep in mind interest rates are typically higher on a second mortgage versus refinancing and can add additional cash flow tension to your monthly bills. Talk to a mortgage professional today to determine if this is the best option for you!
What is a second mortgage?
First things first, a second mortgage refers to an additional or secondary loan taken out on a property for which you already have a mortgage. This is not the same as purchasing a second home or property and taking out a separate mortgage for that. A second mortgage is a very different product from a traditional mortgage as you are using your existing home equity to qualify for the loan and put up in case of default. Similar to a traditional mortgage, a second mortgage will also come with its own interest rate, monthly payments, set terms, closing costs and more.
Second mortgages versus refinancing
As both refinancing your existing mortgage and taking out a second mortgage can take advantage of existing home equity, it is a good idea to look at the differences between them.
Firstly, a refinance is typically only done when you’re at the end of your current mortgage term so as to avoid any penalties with refinancing the mortgage. The purpose of refinancing is often to take advantage of a lower interest rate, change your mortgage terms or, in some cases, borrow against your home equity.
When you get a second mortgage, you are able to borrow a lump sum against the equity in your current home and can use that money for whatever purpose you see fit. You can even choose to borrow in installments through a credit line and refinance your second mortgage in the future.
Some key things to note when looking at a second mortgage or refinancing:
- If you have a favorable interest rate on your first mortgage, a second mortgage allows you to keep the lower rate on your primary loan, resulting in a lower blended rate.
- Refinancing resets the amortization schedule, which could extend the loan term. A second mortgage leaves the existing term intact, helping you stay on track with your overall financial goals.
- Second mortgages often come with more flexible terms, such as interest-only payments, fully open, or shorter term, which can suit your immediate needs.
What are the advantages of a second mortgage?
There are several advantages when it comes to taking out a second mortgage, including:
- Homeowners can access a significant portion of their home equity (typically 80%-85% LTV).
- Better interest rate than a credit card as they are a ‘secured’ form of debt.
- You can use the money however you see fit without any caveats.
- Allows you to access your home equity without breaking your existing mortgage and incurring penalty fees.
What are the disadvantages of a second mortgage?
As always, when it comes to taking out an additional loan, there are a few things to consider:
- Interest rates tend to be higher on a second mortgage than refinancing your mortgage.
- Additional financial pressure from carrying a second loan and another set of monthly bills.
Before looking into any additional loans, such as a secondary mortgage (or even refinancing), be sure to reach out to me! Regardless of why you are considering a second mortgage, it is a good idea to get a review of your current financial situation and determine if this is the best solution before proceeding.
10 Smart Spring-Cleaning Tips to Revitalize Your Home
As the days grow longer and the sun shines brighter, it’s the perfect time to refresh your home with a thorough Spring clean! A clean, organized space can help you feel more energized and ready to embrace the season ahead.
Here are some tips to make your Spring cleaning both efficient and enjoyable
- Create a Playlist: Make cleaning fun by curating a playlist of your favorite upbeat songs. Music not only makes the time fly but can also turn your cleaning routine into an enjoyable activity. Dance while you dust and sing while you sweep—your home will thank you!
- Clean One Room at a Time: A clean home doesn’t happen overnight, so avoid feeling overwhelmed by tackling one room at a time. Start small, such as with bathrooms or closets, and work your way up to larger spaces like the kitchen or living room. Alternatively, dedicate one or two rooms per weekend, and by the time May rolls around, your home will sparkle!
- Declutter as You Go: Spring cleaning isn’t just about scrubbing and polishing—it’s also the ideal time to declutter. Sort through closets, cupboards, and drawers, and separate items into “keep,” “donate,” and “discard” piles. Haven’t used that appliance or worn that sweater in over a year? It’s time to let it go. Clearing out the clutter not only makes cleaning easier but also creates a more organized and calming space.
- Go Green: Keep your cleaning eco-friendly by opting for natural solutions. Vinegar and baking soda are versatile and effective for a variety of tasks, from cleaning countertops to unclogging drains. A steam cleaner can also be a fantastic tool for deep-cleaning floors, appliances, and even outdoor spaces without the need for harsh chemicals. Choose sustainable products to keep your home fresh and the environment happy.
- Work From Top to Bottom: When cleaning, always start high and work your way down. Dust light fixtures, ceiling fans, and shelves first to avoid re-cleaning surfaces below. This method ensures maximum efficiency and minimizes extra work!
- Don’t Forget Hidden Spaces: Pay attention to often-overlooked areas like baseboards, window tracks, and behind large furniture. Use a vacuum attachment to get into tight corners, and wipe down walls and doorframes for a truly comprehensive clean.
- Freshen Up the Fridge & Freezer: Spring is the perfect time to clean out your fridge and freezer. Empty the contents, toss expired items, and clean the interior surfaces with a mixture of water and mild soap or vinegar. If defrosting is needed, plan ahead to minimize food waste. Restocking a fresh, clean fridge feels fantastic and can even inspire healthier eating habits!
- Revitalize Air Quality: Spring allergens can wreak havoc on your sinuses, but replacing your HVAC and furnace filters can help. Upgrade to a higher-quality filter for added protection against allergens, chemicals, and odors. Consider adding an air purifier for an extra boost to your home’s air quality.
- Wash Fabrics & Upholstery: Take time to wash or vacuum curtains, upholstery, and throw pillows, as they can harbor dust and allergens. Rotate or clean your mattress, and swap out heavy winter bedding for lighter, seasonal options. Fresh linens make a big difference in creating a rejuvenated space.
- Tidy Outdoor Areas: Spring cleaning isn’t limited to the indoors! Sweep porches, patios, and decks, and clean outdoor furniture. If you have a garden, take this opportunity to prepare for planting by clearing debris and cleaning tools. A fresh outdoor space is the perfect complement to your revitalized home.
Embrace these tips, and your Spring clean will leave your home feeling fresh, organized, and ready for the new season!
Economic Insights from Dr. Sherry Cooper
Wall Street reacted positively to Trump’s initial tariff backpedalling, pushing US equity futures higher. This is a sign that he may pursue a less protectionist approach; for now, it is a boon for multinational companies that rely on cross-border commerce, giving them time to adjust pricing and mitigate any impact on profit margins.
The US dollar, however, slumped, albeit briefly. Canada’s dollar has traded markedly below the US dollar for years. And, although we promised to tighten our border restrictions, the US’s illegal immigration problems have little to do with Canada.
The Bank of Canada’s fourth-quarter consumer expectations survey reveals that despite recession concerns, 22.4% of respondents see a greater than 50% chance of moving to a new primary residence within the next year—up from 21.1% in the previous quarter.
Similarly, 13.5% of respondents plan to sell their home within the next year, up from 11.4% in Q3. The results also show increased interest from renters, with 19.9% considering a home purchase in the next 12 months, compared to 16.9% last quarter.
The Bank of Canada attributes the rise in homebuying intentions to expectations of further interest rate cuts in 2025.
“Survey results show that these home buying intentions are supported by consumers seeing and expecting easier credit conditions,” the report notes.
However, it also cautions that the timing of home purchases remains uncertain for many: “…those planning to buy a home over the next 12 months said they anticipate around a 50% probability of actually carrying through with those plans.”
The Q4 survey revealed that inflation expectations have primarily returned to historical norms. Consumers’ inflation expectations for food and gas stayed steady in the fourth quarter, while expectations for rent eased. However, they still anticipate rent will rise faster than pre-pandemic levels.
As a result of the improving inflation outlook, consumers expressed strong intentions to increase spending on essentials and housing over the next year. For the first time since 2021, they anticipate spending will outpace price increases.
While the new administration in Washington poses considerable uncertainty for the Canadian economy, the odds are that the Bank of Canada will successfully master a noninflationary rebound in economic activity in 2026.
Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.
Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.
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