Second Mortgage

Learn what a second mortgage is in Canadian real estate, how it works, and what homeowners should consider when borrowing against home equity.

Second Mortgage

May 29, 2025


What is a Second Mortgage?

A second mortgage is a loan secured against a property that already has a first (primary) mortgage, allowing the homeowner to borrow additional funds using home equity.

Why a Second Mortgage Matters in Real Estate

In Canadian real estate, second mortgages are used for renovations, debt consolidation, investments, or accessing liquidity without refinancing the original mortgage.

Key characteristics include:

  • Higher interest rates than first mortgages
  • Shorter terms and interest-only options
  • Must be registered in second position on title


If the homeowner defaults, the first mortgage lender is paid before the second lender. Borrowers should assess repayment capacity and the impact on overall debt.

Example of a Second Mortgage

A homeowner takes out a $60,000 second mortgage to renovate their kitchen while keeping their low-interest first mortgage intact.

Key Takeaways

  • Loan secured by equity behind first mortgage.
  • Higher interest due to greater risk.
  • Used for renovations or debt consolidation.
  • Adds to total property debt load.
  • Requires careful planning and registration.

Related Terms

Additional Terms

Public Realm Improvements

Public realm improvements are enhancements to public spaces such as sidewalks, parks, plazas, and streetscapes, often funded or contributed by. more

Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

Green infrastructure refers to natural or engineered systems that manage stormwater, reduce heat, and improve sustainability in developments.. more

Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual 1% tax on the value of vacant or underused residential property owned by non-resident,. more

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