Second mortgage
Definition
A loan secured against your home behind your existing mortgage.
Rates are higher because the second lender is paid only after the first in a default. Typically used for short-term cash needs.
A second mortgage sits behind your first in priority, so if the home is sold under default the first lender is paid in full before the second sees a dollar. That extra risk is why seconds carry higher rates (often 8–12%+) and usually a lender fee.
They're useful when breaking your first mortgage would cost more in penalty than the second's higher rate costs in interest — common for accessing equity mid-term, consolidating debt, or covering a short-term need without disturbing a low-rate first.
Most second mortgages are funded by B or private lenders on short interest-only terms, with a plan to roll everything into one new first mortgage at the next renewal or refinance.
Sources
- Borrowing against home equity (Financial Consumer Agency of Canada)
Related terms
Ask Maya about Second mortgage
Instant answers · 50+ languages · no credit pull
Maya · 24/7 AI assistant
What does second mortgage mean for you?
Ask Maya in plain English, or in any of 50+ languages. Or call us.