Sometimes it’s good to come in second — as another mortgage behind the first one, that is.
Canadian debt levels are still high this year, putting extra pressure on many households. At the same time, homeowners are sitting on significant equity, owning close to three-quarters of their homes on average, according to recent StatsCan data.
But even with that equity available, tapping into it isn’t always simple, especially if you want to keep your existing mortgage and rate as is.
A simpler way to keep your rate, and still get the funds you need
A second mortgage is a separate loan secured against your home. It has its own interest rate, term, and payment, and it sits behind your first mortgage on the home’s title.
Unlike a refinance, which involves altering your current mortgage (and paying a hefty penalty to do it mid-term), this straightforward addition gives you the funds you need, and keeps your first mortgage intact.
For many, that can be a welcome alternative to the penalty involved in breaking a term or having a larger first mortgage. A second mortgage allows you to borrow a smaller, defined amount — whether for renovations, back taxes, education costs, or consolidating debt — without redoing your entire mortgage at a new rate.
And at a future renewal, depending on the details, you may be able to roll the second mortgage into the first, potentially without penalty.
Debt stress is rising — steady payments can help
Collectively, Canadian debt is rising. Non-mortgage debt has increased by 4.3% in 2025 (according to a recent TransUnion report), and credit card interest rates continue to hover above 20%. Many households are carrying more high-interest balances than they'd prefer.
A second mortgage can consolidate those scattered balances into a structured repayment plan, likely at a much lower rate than alternatives, such as a private loan or a credit card.
Some homeowners also grow weary of a large balance on their HELOC (home equity line of credit) or another line of credit and decide to convert it into a second mortgage with a fixed rate. It gets paid off at a steady pace, leaving behind the fluctuating variable HELOC rate that can make it harder to pay down.
Debts aren’t eliminated, but they’re better aligned, making budgeting and repayment simpler.
The cost picture: higher than your first, but often the cheaper path
Second mortgages typically come with higher mortgage rates and additional admin fees than a primary mortgage, because lenders take on more risk loaning in second position (if your home is sold, lenders are paid in order on your home’s title).
Even so, the balance and payments are usually smaller than with a primary mortgage or a full refinance, and the lower mortgage rate can help you save on higher interest costs you may already be paying.
Does a second mortgage have to be with the same bank as your first?
You have options — your second mortgage can be with a different lender.
Second mortgages aren’t available everywhere. Some lenders restrict them, while others won’t permit a second loan behind their own.
You can check with your bank. But if you want your best solution, try enlisting an expert mortgage broker.
At True North Mortgage, for example, their salaried brokers have access to numerous banks, non-bank lenders, and alternative and private options. This range offers greater flexibility than the big banks, and they can often work with second-mortgage borrowers to find a cost-effective fit.
As for mortgage approval, compared to a primary mortgage, the equity in your home has greater influence on your application, with income, credit, and existing debts still factored in.
Are third mortgages an option?
They are, though fewer lenders offer them. Like some second mortgages, third mortgages are typically used for more complex mortgage needs, such as deeper consolidation or to bridge a short-term gap, before being paid out or potentially rolled into a single loan at the next renewal.
With careful planning, this option can serve as an efficient solution. One of True North’s long-time brokers, Himalaya Mehta, recently helped an Ontario couple get out of a jam through a short-term fix.
“Dealing with a job interruption, the couple needed a funding solution to close the gap while waiting for a second home to sell. I was able to secure a third mortgage through an alternative lender at a better rate and lower fees than other options. By the term’s end, they had sold the home and were able to repay the mortgage — though it could have been renewed if they needed more time.”
A practical tool in a tighter financial year
Second (and third) mortgages aren’t about taking on unnecessary debt. They’re about using your home equity for needed funds without giving up a great rate or paying an additional penalty you don’t need to take on.
In a year when household debt remains elevated and budgets feel tighter, that practicality matters.
For many homeowners, a second mortgage has become a quiet middle ground — a way to unlock equity, reduce interest costs, and leave their main mortgage untouched.
Sometimes a second is all you need to get back on track
That first second counts when you pick up the phone or click an application link to connect with someone for mortgage help (like for a second mortgage).
You’re in good hands at True North Mortgage, a top trusted brokerage in Canada. Their highly trained, salaried experts provide you with exceptional service to quickly find the best mortgage solution when you need it most, no matter if your mortgage needs are straightforward or more complex.
True North Mortgage is the original industry disruptor, offering better rates, service, and mortgage solutions than big banks. Contact Canada's No.1 Mortgage Broker today — and get help in your preferred language.