Looking for a home equity mortgage to address your financial priorities? Well, even if you have an ongoing mortgage, you might be eligible to get a second one. However, you need to first understand the basics, which involve choosing the right lender in Canada.

If you are willing to ease up your cash flow at manageable rates, there’s hardly any option better than leveraging your home equity. In 2020, as many as 770,000 Canadians took on second mortgages. This particular group accounts for 7.7% of the overall number of homeowners in Canada.

For more information on second mortgages, visit https://alpinecredits.ca/second-mortgage/.

What Is A Second Mortgage?

A second mortgage refers to an additional loan that you can take using your home equity, even when you already have it mortgaged. However, a second mortgage involves greater risk for the lender. In case you default on your repayments and your home is taken into possession, the first lender would be paid out initially. To compensate for this extra risk exposure, the rates for second mortgages are generally higher than the first mortgage.

When you take out a second mortgage, you need to make repayments to both lenders simultaneously.

Choosing A Second Mortgage Lender In Canada

Being meticulous while choosing your second mortgage lender will allow you to save significantly in interest charges. Moreover, your home happens to be one of the most sizable investments. A little difference in the interest rate can reflect conspicuously on your monthly repayments.

Here’s how you should narrow down your options when you select a second mortgage lender in Canada.

1. Explore Available Options

While financing your second mortgage, make sure to explore all the available options.

You might reach out to your primary lender. However, you might have other lenders around, ready to offer the loan at a lower interest rate. If it becomes difficult to collect adequate information on all the reputed lenders, it makes sense to consult a mortgage expert.

2. The Best Rate Might Not Be Ideal

Simply choosing your second mortgage lender based on the interest rate might not be the best decision you can make. Remember, you need to factor in other aspects beyond lower rates of interest. You need to evaluate the closing costs, APR, processing fees for the loans, and available discounts as well.

In the end, the process may be challenging. This is why homeowners seek the assistance of established mortgage brokers. You would likely not be pleased with a policy where hidden costs overshadow the advantages.

3. Don’t Go With Your Realtor’s Advice

If you are in touch with a realtor, the company might recommend a second mortgage lender. However, their recommendations might not be in your best interests.

It would be wise to talk to a reputed mortgage broker while selecting the creditor. Established mortgage brokers are licensed as per the provincial norms in Canada.

4. Go For Written Commitments

Don’t make the mistake of trusting the representatives of the creditor based on verbal communication. Make sure to get the terms and conditions written in the agreement. Next, let your mortgage broker review the agreement for any possible flaws.

Every detail of the contract should reflect in writing. Proceed to sign the document only after receiving a nod from your mortgage broker.

How Can You Qualify For A Second Mortgage?

Lenders consider second mortgages to be risky bets. Evidently, the qualification criteria are likely to be more stringent. Here are some of the aspects that the lender would focus on.

1. Your Credit Score

Your credit score reflects your financial responsibility and money-handling habits. The lender would check your credit score, which will directly impact the rate of interest on your second mortgage loan.

2. Verification Of Income

A potential creditor is likely to check your pay stubs carefully. They might also ask for a copy of the bank statements for the last few months. This way, they can verify whether you are the right candidate to get the loan. Once you convince them about your repayment capabilities, you stand a better chance to obtain them.

3. Value Of Equity And Property

When you reach out to a lender, you need to submit a record of your equity. You will have a better chance of qualifying for the loan if you have more equity. Also, the creditor needs to ensure that your home is worth the value you are claiming.

How Much Can You Borrow With Your Second Mortgage?

At the outset, the lender would calculate the equity you have on your property. In most cases, they provide an amount equivalent to 80% of the property equity.

Calculating it this way, if the value of your property is $1,000,000, out of which you have already repaid $400,000, you can borrow a maximum amount of $320,000 as your second mortgage.

For qualified borrowers with a healthy credit score, reputed mortgage brokers can recommend lenders offering rates as low as 4%.


Whether you are looking forward to consolidating your debts, managing expenses for higher education or paying off medical bills, a second mortgage can be a beneficial option. You might even plan to purchase a car or make home improvements at manageable interest rates.

Under any condition, make sure to consult a reputed mortgage broker while choosing the second mortgage lender. This ensures that you have the best recommendations in terms of interest rates, closing expenses, and processing charges.

Remember, a mortgage would bring you greater financial responsibilities. It pays to consult experts who are already a part of the industry.

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