Second Mortgages

Coreena

New Forum Member
Registered
Hi all, I am thinking about doing a second mortgage in BC can any one tell me how they work if I need to foreclose? Do I need to talk to a lawyer or a mortgage broker about details on Foreclosures.

Thanks
Coreena
 

DonCampbell

Investor, Analyst, Author, Philanthropist
Staff member
REIN Member
Before you become a lender (i.e providing a 2nd mortgage) it is CRITICAL that you get a lawyer on your side.

Also, understand the risks and the returns. You must BECOME the bank, i.e. higher the risk the higher the interest rate. Often 2nd mortgages also have a fee attached to them. In other words you would receive a 1 - 2% fee of the value of the mortgage up front in cash plus an annual interest rate.

Check around at what the market is charging for 2nd mortgages so you are not underselling yourself.

You will also want to see a current appraisal and current first mortgage statement on the property to ensure that there truly is some equity left in the property (to protect your position).

In other words, whatever the bank would ask of the property owner, that is what YOU ask for. Credit checks, verification of income, appraisals, property inspection reports etc. Banks ask for these for a reason and so should you.

Trust that helps.
 

Coreena

New Forum Member
Registered
QUOTE (DonCampbell @ Jun 19 2008, 09:39 AM) Before you become a lender (i.e providing a 2nd mortgage) it is CRITICAL that you get a lawyer on your side.

Also, understand the risks and the returns. You must BECOME the bank, i.e. higher the risk the higher the interest rate. Often 2nd mortgages also have a fee attached to them. In other words you would receive a 1 - 2% fee of the value of the mortgage up front in cash plus an annual interest rate.

Check around at what the market is charging for 2nd mortgages so you are not underselling yourself.

You will also want to see a current appraisal and current first mortgage statement on the property to ensure that there truly is some equity left in the property (to protect your position).

In other words, whatever the bank would ask of the property owner, that is what YOU ask for. Credit checks, verification of income, appraisals, property inspection reports etc. Banks ask for these for a reason and so should you.


Great thanks Don!
Trust that helps.
 
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