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

Sales-To-New-Listings Ratio (SNLR)

The Sales-To-New-Listings Ratio (SNLR) is a real estate metric that compares the number of homes sold to the number of new listings in a given period.. more

Market Type

Market type refers to the classification of a real estate market based on supply, demand, and pricing trends, typically categorized as buyer’s,. more

Outparcels

Outparcels are stand-alone commercial properties located near or on the outer edge of a larger retail or shopping centre complex.. more

Halo Effect

The halo effect in real estate refers to the positive influence that a popular or high-end development has on the surrounding property values and. more

Sump Pump

A sump pump is a mechanical device installed in the lowest part of a basement or crawl space to remove accumulated water and prevent flooding.. more

Structural Integrity

Structural integrity refers to a building’s ability to withstand its intended loads without failure, deformation, or collapse during its lifecycle.. more

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