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The A to Z of Third Mortgages
Third Mortgages are those mortgages that are applied for by those with pre-existing first or primary and second mortgages on their home. In most cases when there is a penalty on the primary and the second mortgage is not fair, a third mortgage is taken. Third mortgages are great tools for debt clearance too. A third mortgage can be taken or applied for by the homeowner from a lender on the basis of the property value. As the name suggests a third mortgage is taken when there are existing first and second mortgages. Just like first and second mortgages, monthly payments need to be made for third mortgages too. Since it is the third in the line of mortgages, a third mortgage is considered subordinate to the first and second mortgages so if the homeowner defaults on mortgage payments, the first and second mortgages get settled first. How do third mortgages help? Mortgages are taken by homeowners so they can use the sum towards renovations on an existing property or at times also when they want to buy a new one. So, a third mortgage comes in very handy as homeowners can borrow additional funds, which they can then use for renovations or whatever their need of the hour is such as paying tuition fees, debt consolidation, down payment for an investment property, funding a holiday, bear medical expenditures and so on. The higher the value of your property, the more you can borrow. One can actually borrow up to 85% of the property value. Why opt for third mortgages? Even though they fetch homeowners additional funds, third mortgages are helpful beyond that. They can help homeowners stay away from high-interest loans and other borrowing options. Being a subordinate mortgage, it is also the last to be paid and hence an intelligent choice. Qualification criteria for third mortgages Qualification criteria for third mortgages include the homeowner's credit scores, loan-to-value ratio, and gross income. Additionally, a good credit interest also goes a long way in qualifying you for the third mortgage. The application process for third mortgages The application process for third mortgages can be hassle-free and speedy. Once you fill up the application form, it is reviewed by the concerned parties. You may be contacted for any clarifications needed about your forms before actually being approved. Some disadvantages of taking third mortgages include paying additional interest and rates are high as far as third mortgages are concerned. Third mortgages are not a priority for most lenders. If you are considering applying for a third mortgage, debt service capability must be taken into account before you proceed. It is best to discuss your financial situation with a mortgage broker who can study the details and give an expert opinion on if or not it is the right thing for you. If you need any help or support with your first, second, or third mortgages or have any doubts that need to be cleared, do write to us at LendX Financial in Brampton, Greater Toronto Area.