2nd Mortgage Requirements
Mortgage License or New Lender License Is not a money gouging license from clients
Many new lender or mortgage agents are charging enormous interest rates on 2nd mortgage and are trying to miss use their client’s situation on panic decisions. This is not the ethics of business.
Charging enormous fees, very high interest rates, misguiding them on different conditions are not the true ethics of mortgage business. If you see any mortgage Broker /Agent doing this to you, stop there right away.
Some agents will advertise low fees 2nd mortgage and low interest rates on 2nd mortgage to attract you but when you end up borrowing 2nd mortgage from them the fees and charges are through the roof some charge 15% to 20% and 18% to 19 % interest rates. As 2nd mortgage industry is not regulated or capped on the terms of fees and interest rates by government of Canada. But this does not mean that the mortgage Brokerage/Agent got the license to rip off clients.
The interest rates on 2nd mortgage depends on the credit, character and equity in the home of a borrower the higher the equity the higher risk for lender resulting in higher interest rates.
In another case the interest rates will be high when a borrower has a history of non-payments and has many accounts in defaults. As has never returned money to people he/she has borrowed to this kind of person 99% lender will not even consider lending their money. Even if someone does lend them 2nd mortgage against their home, the lender will charge high interest on 2nd mortgage because his money is at high risk.
If your situation is not like this then you should not pay high interest rate.
What are the interest rates on 2nd mortgage?
2nd mortgage interest rates are anywhere from 8% to 14%. If you are being charged above14% either your Mortgage Broker/Agent is gouging money from you or your lender is gouging on you to make money from your situations. It also depends on your Mortgage Broker how many lenders he has if he has limited lenders there will be money gouging from you. If your Broker/Agent is competent he will have enough 2nd mortgage lenders to get you the money and will fight with lenders to get you the best rates on your 2nd mortgage. Broker/Agents first responsibility is to save his investors’ money but his ethics is also to save your home and roof on your kids head.
A true ethics person will never want to get their clients home or get his home for power of sale that is the last things the lender wants to do. But there are some lenders, lawyer and agents in the market who are in business to snatch your home from you. A true lender only wants to make money on interest based on their client’s affordability and that’s what the ethics of the mortgage broker should be.
So be careful if you are being charged high interest rates on 2nd mortgage. Or on fees and charges it is an alarming situation to move out and find someone else. If you see a low interest rates or low fees ad be aware that is a bait to get you and gouge your money.
By Amit Dhingra