How to Use the Second Mortgage to Start a Business?

How to Use the Second Mortgage to Start a Business?

Matrix Mortgage Global – How to Use the Second Mortgage to Start a Business

With job security more often than not, being perceived as a thing of the past, more and more Canadians are venturing out on their own to start businesses. But depending on the kind of business you are starting, this can be costly and it can be tough for a new entrepreneur to secure the funding they need through a traditional bank.

 How to Use the Second Mortgage to Start a Business

Fortunately, if you have built up equity in your home it is possible to use this equity to fund your business by taking out a second mortgage or home equity line of credit (HELOC). So, could this be a good option for you?

You will need to take a number of steps to determine this.

  1. Determine how much your new business will cost to start. If you are starting a business from the ground up, you will want to determine how much you will need to spend initially on equipment, leases, advertising, etc. If you are buying an existing business, you will want to determine if the asking price is fair. Be sure to factor in how much it will cost for the services of an accountant and attorney.
  2. Find out how much equity you have in your home. In order to get a second mortgage big enough to pay for your business start-up costs, you will need to make sure that you have sufficient equity in your home. Do this by determining the current value of your home and then subtracting any money you have left owing on it.
  3. Talk to your mortgage broker. If you determine that a second mortgage might be right for you, you will want to arrange a meeting with your mortgage broker. They will be able to help find the right lender for your situation and help you with the necessary paperwork to get the money you need transfer to your bank account.
  4. Start or purchase your business. Now that you have the cash from your second mortgage you will be able to achieve your dream of becoming an entrepreneur.

Using the equity in your home through a second mortgage can be a good way to get the cash you need to start a business of your own. Remember however that any business venture comes with risks and you are essentially putting your home on the line should you in the future become unable to make the payments on your second mortgage. It is a decision, therefore, that needs to be considered carefully.

If you would like to discuss the second mortgage with a member of the Matrix Mortgage Global team, we would be happy to talk to you in further detail about this borrowing strategy. Call us today at 1-800-429-0717.

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