Toronto: Top 3 Tips to Manage Your Second Mortgage Effectively
After giving it serious thought, you’ve decided that seeking a second mortgage is the right things to do. Before you talk with a broker and begin to review offers, it makes sense to have a plan for managing that mortgage responsibly. Here are three tips that will help you draft a strategy that ensures you get the most benefits from the arrangement and manage to pay off the debt by the agreed upon settlement date.
1 - Take a Good Look at Your Current Budget
Before you begin to talk with anyone about securing a second mortgage sit down and review your current budget. If the plan is to use the proceeds from the mortgage to pay off other loans and credit card debt, consider how many line items this approach will eliminate. Based on your average household expenses that remain, will you free up enough income to cover the monthly payment on that second mortgage? If so, you will have no trouble fitting the payment into your finances.
Remember that the goal is to find that sweet spot between being able to cover the mortgage payment and still having some funds you can put into savings. Doing so will mean you can use the mortgage to improve the credit rating while also setting aside funds that can be used if an emergency should arise.
2 - Avoid Unnecessary Debt While You Pay Off the Mortgage
Perhaps you plan on securing a bad credit mortgage in Mississauga as a way to pay off unsecured debt and maybe the car loan too. Those are fine goals, but there is another aspect of the situation you should consider. How well will you do with refraining from creating more debt once the balances on those cards are paid in full?
The point of securing that second mortgage was to restructure your debt so you pay less in interest payments and pay off your obligation sooner rather than later. Along the way, you also end up with a more attractive credit rating. All of these benefits will disappear if you begin keeping balances on those credit cards again.
Commit to not carrying balances on your credit cards from month to month. While it may be difficult at times, ultimately becoming debt free and not losing sleep over how to pay the bills is worth it.
3 - Set a Goal to Make an Extra Payment at Least Twice a Year
Along with keeping up the payments on your second mortgage, set a goal to make a couple extra every year. If you can manage more, do so. Paying off the mortgage early will reduce the interest you have to pay over the life of the loan. Those extra payments also look good on your credit reports.
A second mortgage can be a powerful tool for good in the right hands. Make sure you have a plan for managing the loan properly and you will emerge with more wealth and financial stability.
Canada CWF Second Mortgages Broker
1645 Bathurst Street #104
Toronto, ON M5P 3J6 Canada
Tel; (416) 800-8808