Second mortgage payment

What a second mortgage actually is

A second mortgage is a loan secured against your home that sits behind your existing first mortgage. If you default, the first mortgage gets paid out before the second — which is why second mortgages carry higher rates and tighter terms than firsts. In Canada, second mortgages typically come from B-lenders (alternative banks) or private lenders.

Typical rates and fees

• B-lender second: 7–10% rate, 1–2% lender fee, 1–2 year term
• Private lender second: 10–14% rate, 2–4% lender fee, 6–24 month term
• Broker fee: typically 1–2% on private deals (paid by you or split with lender)
• Legal fees: $1,500–$3,000 (private lenders almost always require their own lawyer)
• Appraisal: $400–$700

When a second mortgage makes sense

• You need short-term capital and breaking your first mortgage carries a worse penalty than the second's interest cost
• You're consolidating high-interest debt (credit cards at 19%+) into a lower-rate second
• You're bridging a renovation or business need with a clear exit (refinance into A-tier within 12 months)
• You're short the down payment for an investment property and have strong equity in your home

When it doesn't

• You don't have a clear exit strategy (extending a private second twice gets expensive fast)
• The total stack (1st + 2nd) takes you above 85% combined LTV — your refinance options narrow significantly
• You could break your first mortgage and consolidate into one mortgage at a better blended rate (see blended-rate calc)
• You qualify for a HELOC instead — typically cheaper and more flexible

Second mortgage vs HELOC vs refinance

• HELOC: revolving credit line, lower rate than private second, but qualification harder; ideal if you have time to wait for approval
• Refinance (first mortgage): lowest rate but you pay penalty + legal to break your existing first; best if your first mortgage's remaining term is short
• Second mortgage: fastest funding (often 1–2 weeks for private), highest rate; best for time-sensitive situations or when you can't break the first economically

Risk warnings — read before signing

• Private second mortgages on residential properties are regulated in Ontario and BC, but mistakes still happen. Always work through a licensed mortgage broker.
• Lender fees + broker fees + legal can easily add 5–6% to the cost — calculate the all-in APR, not just the headline rate
• Most privates require power-of-sale or judicial sale rights — defaulting can lose your home faster than missing payments on a bank first
• Don't roll a second mortgage to cover a previous second mortgage's balloon — that's a debt spiral, not a refinance

Related

• HELOC alternative
• Refinance the first mortgage instead
• Debt consolidation refinance
• First mortgage break penalty