Toronto Second Mortgage Broker

What deposit do you need for a second mortgage?

2020-06-25 Jun 25, 2020

Are you considering taking out a second mortgage and want to know how much deposit you need in order for the offer to go forward?

If so, why don’t you keep reading to find out?

For your second mortgage, you should expect the rules to be tougher, as you’re already paying for one mortgage. This will mean your lenders will ask for a higher deposit than what you paid previously. The amount lenders ask for will also depend on your unique circumstances.

So, how much money do you need for a deposit on a second mortgage?

Most second mortgages require a deposit of 25%, although this depends on your current circumstances. If you’re already struggling to pay for one mortgage, you can expect your deposit for a second mortgage to be even higher.

When lenders examine your financial situation, they’ll also want to know what your personal situation is for example:

Why do you want a second home?

So, why do you want to take out a second mortgage? This is key when determining how much you will need to pay, the purpose that you have for your second property is important to your lenders however, it shouldn’t affect your deposit too much.

Disclosing this information, might reduce the amount of deposit required for a second mortgage. For those of you who are buying to let, your deposit should be around 15%-20%.

Do you pay your first mortgage back on time?

As you can expect your lenders will check your current finances, so do you pay your mortgage back in time? If so, your lender will be more likely to ask for a lower deposit because they trust you and may be more willing to give you some offers.

Do you have bad credit?

As you can imagine having bad credit is going to affect how much deposit you pay. Why not try turning your credit score around before applying?

If you do have good credit, then your lenders will most likely trust you and offer some deals!

Sounds great, doesn’t it?

Can you afford a second mortgage?

As you can expect your affordability is key when determining how much deposit you’ll need to pay.

What type of property are you looking to buy?

It may seem unusual, but lenders look at the type of property you’re going to buy. If you’re looking for a property that is built from standard construction then, no worries this won’t affect your deposit.

However, if you’re looking to buy a property that’s not of standard construction then you may find your lenders ask for a higher deposit. Talk with your mortgage advisors to discuss the best routes to take.

If you’re looking to put a deposit down of only 10% then this is going to be extremely difficult. Overall, you should expect to pay from 15%-25% if your credit score and affordability checks are well within the bracket your lenders look at.

All in all, the amount your deposit is going to cost depends solely on your personal circumstances. Get talking with your mortgage broker to discuss what steps you should take.