For homeowners who want to keep their first mortgage
A second mortgage lets you borrow against your equity and leave your first mortgage, and its rate, exactly as it is.
A second mortgage sits behind your first one on the title of your home. It can be useful when your first mortgage has a low rate or a large penalty to break. It also costs more than a first mortgage, so it should have a clear purpose and a clear way out.
You've started an application.
Saves as you go · No credit check · A licensed mortgage professional follows up
1A second mortgage is a separate loan secured on the same property, ranking behind your first mortgage. The first lender is paid first if the home is ever sold or enforced on.
2The amount you may borrow is limited by the combined loan to value: your first mortgage plus the second, compared with the home value. Lenders commonly set a ceiling, which varies by lender and property.
3Rates are higher than first mortgage rates and the term is often short, one to three years. There are usually lender and broker fees, legal and appraisal costs.
4It can make sense when breaking your first mortgage would trigger a large penalty or lose a low rate. A refinance or HELOC may cost less in other situations, so compare them.
Get ready
What lenders will ask you for
Government photo ID for every owner on title
Your latest property tax bill and proof of home insurance
Your first mortgage statement showing the balance, rate and renewal date
Income proof if you have it: pay stubs, notices of assessment, pension statements or bank statements
Details of what the money is for, such as debts, renovations or a business need
Your options
Which kind of lender fits you
Option 1
Second mortgage
Keeps your first mortgage untouched. A separate loan with its own rate, term and fees.
Option 2
Refinance your first mortgage
One loan at one rate, often cheaper, but you may owe a penalty to break the current mortgage.
Option 3
Home equity line of credit (HELOC)
Flexible borrowing with interest-only payments, if you qualify on income and credit.
Option 4
Private or alternative lender loan
May be used when you do not meet bank rules; usually the highest cost, so plan the exit.
Avoid these
Common mistakes
!Not comparing it with a refinance. Sometimes the penalty to break is small enough that a refinance is cheaper overall.
!Using it for something that will not pay for itself, then struggling with two payments.
!Forgetting the second mortgage matures. Plan how it will be renewed, repaid or refinanced at the end of the term.
!Not asking whether your first mortgage lender allows a second mortgage on the property.
Take action
Your first steps
1Write down what you need the money for, how much, and how you will repay it.
2Gather your first mortgage statement, property tax bill, ID and any income proof.
3Find out the penalty to break your first mortgage so the true cost of a refinance is known.
4Start the intake so a broker can compare second mortgage lenders, refinance and HELOC options.
5Review the written costs, check the term and renewal terms, and get independent legal advice before you sign.
The intake
What your application will ask
Your online application goes one topic at a time and saves every answer and document as you go, so you can stop and come back. It never runs a credit check, and a licensed mortgage professional reviews it and follows up.
For second mortgages borrowers
What is the home worth, where is it, and what is the balance, rate and renewal date of your first mortgage?
How much do you need, what is it for, and how fast?
How do you earn money today, and what can you show (pay stubs, tax returns, bank statements)?
How will the second mortgage be repaid or refinanced at the end of its term?
Plus the basics everyone answers 13
Your full name, email, mobile number and the best time to call.
The city you live in, and whether you are a Canadian citizen, permanent resident, or other status.
Are you applying alone or with someone else? If with someone, their name and how you are related.
Your goal: buy, refinance, renew, take out equity, or consolidate debt?
The property type (house, condo, multi-unit) and the city it is in.
Will you live in it, rent it out, or both?
The purchase price or estimated value, and your target closing or renewal date.
Your down payment or available equity, and where it comes from (savings, RRSP/FHSA, a gift, sale of another property).
Your approximate yearly household income before tax.
Your monthly debt payments: car loans, credit cards, lines of credit, student loans, support payments.
Your own estimate of your credit score: excellent, good, fair, poor, or not sure.
In the last 7 years, any bankruptcy, consumer proposal, collections, or missed mortgage payments?
May the broker contact you? (A credit check is only ever run later, with your separate written consent.)
Scroll for more
Answers
Questions people ask
What is a second mortgage?
A second loan secured on your home behind your first mortgage. You keep your first mortgage in place and borrow against some of the remaining equity.
How much can I borrow with a second mortgage?
It depends on the home value, your first mortgage balance and the lender. Lenders commonly cap the combined loan to value, and a broker can estimate your range once the numbers are known.
What does a second mortgage cost?
A higher rate than a first mortgage, plus lender and broker fees, legal and appraisal costs. Ask for the full cost in writing and compare it with a refinance.
Is a second mortgage better than a refinance?
Sometimes. It is often better when the penalty to break your first mortgage is large or your first rate is low. A refinance can be cheaper when the penalty is small or rates have dropped.
How long is a second mortgage term?
Often one to three years. Plan how it will be repaid, renewed or refinanced when it matures.
Does starting the intake affect my credit?
No. It is only questions. A credit check, if needed, comes later and only with your permission.
General information, not mortgage, legal or tax advice. Lender rules change and every application is reviewed on its own facts. Your application and documents are stored privately and go only to a licensed mortgage professional at Top Mortgages Inc; they are never sold, and no credit check is run without your separate written consent.