Looking for Second Mortgages in Ontario?

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When money gets tight, and you’ve built up some equity in your home, a second mortgage can be a useful tool to help you move forward financially. Whether you’re looking to consolidate high-interest debt, pay for renovations, or free up cash for a major expense, second mortgages are becoming more popular across Ontario in 2025.

Let's answer some of the most common questions—What exactly is a second mortgage? Who offers them? What are the current interest rates? Can you get one with bad credit?

How Do Second Mortgages Work in Ontario?

A second mortgage is a type of loan that’s secured against your home—just like your original mortgage. But instead of replacing your first mortgage, it sits behind it on title, which is why it’s called a “second” mortgage.

In Ontario, major banks usually only offer second mortgages if they also hold the first mortgage on your home. So if your first mortgage is with a different lender, it’s unlikely a big bank will give you a second one. That’s where B lenders and private lenders come in—they’re the ones who specialize in second mortgages.

There are two main types of second mortgages:

Fixed-rate second mortgage loan – You get a lump sum of money, and you repay it in regular monthly payments over a set term (usually 1 to 2 years).

Revolving second mortgage or Home Equity Line of Credit (HELOC) – This lets you borrow against your home’s equity as needed, kind of like a credit card. You only pay interest on what you use.

Either way, the loan is backed by the equity in your home, and lenders are betting that you’ll repay them—or else they can take action against your property, just like your main mortgage lender can.

Most Common Reasons to Get a Second Mortgage

Second mortgages can be a smart financial move in certain situations—especially when you need money fast and have equity in your home. Here are a few common reasons why Ontario homeowners take out a second mortgage in 2025:

Debt consolidation (especially high-interest credit card or personal loan debt)

Paying for home renovations to increase property value or comfort

Helping with living expenses and kids' tuition

Starting a business or covering temporary cash flow needs

Handling unexpected expenses for medical or legal reasons

The key is that you need to have enough equity in your home to borrow against it. Most lenders will let you borrow up to 80–85% of your home’s appraised value, minus what you still owe on your first mortgage.

Using a Second Mortgage for Debt Consolidation

One of the most common and practical uses for a second mortgage in Ontario right now is debt consolidation.

If you’re juggling high-interest debts—like credit cards at 20% or more—a second mortgage could help you slash your monthly payments and save thousands in interest.

Let's look at the math:

You have $50,000 in credit card debt, with minimum payments of around $1,250/month (most lenders require about 2.5% of the balance monthly).

You take out a home equity loan at 9.99% interest.

Your new monthly payment drops to under $500/month.

That’s a monthly savings of about $750—or $9,000 a year. Plus, it’s easier to manage one payment instead of several. And if you pay it off faster, you save even more.

Current Second Mortgage Rates in Ontario (2025)

Home equity loan (fixed second mortgage): starting at 6.99%

Home Equity Line of Credit (HELOC): starting at 7.49%

Second mortgage rates are obviously higher than first mortgage rates, but they are significantly lower than credit cards and personal loans, which often charge 19.99% or more.

Ultimately, your rate will depend on your broker's knowledge, the amount of equity you have available, your credit score, and income.

How to Apply for a Second Mortgage in Ontario

Getting a second mortgage in Ontario isn’t as hard as you might think—but it’s important to do it the right way. Here’s what the process usually looks like:

Talk to a reputable mortgage broker

Most banks don’t offer second mortgages unless you already have your first with them. A broker works with many lenders, including private ones, and can match you with the right option.

Prepare your documents

You’ll need ID, proof of income (or explanation if you don’t have steady income), a mortgage statement, property tax bill, and possibly credit reports.

Appraisal is arranged by the broker

The lender will want to know what your home is worth. Your broker will help set up an appraisal to estimate your home’s current market value.

Loan is approved and funded

If everything looks good, you’ll get approved. Once you sign the paperwork, the funds are usually available within a few days.

Top Second Mortgage Lenders in Ontario (2025)

When it comes to second mortgages in Ontario, most major banks don’t offer them unless they already hold your first mortgage. That means if you're looking for a second mortgage, you're likely dealing with alternative lenders—also called B lenders—or private lenders.

Here’s the important thing: most of these lenders aren’t open to the general public. You can’t just call them up or apply online like you would with a bank. They work exclusively through licensed mortgage brokers who know how to assess your situation, prepare your application, and present it to the right lenders.

Not all lenders are created equal. Some are more flexible with credit scores. Others are better for short-term financing.

A mortgage broker helps you figure out:

Which lenders will actually consider your application

Who offers competitive rates for your risk profile

Which lender’s terms (fees, repayment rules, penalties) are the most borrower-friendly

That’s why using a broker isn’t just helpful—it’s usually required when dealing with second mortgages in Ontario. A good broker will shop your application across multiple lenders to find the best match and make sure you understand the full cost and risks before you sign anything.

Some of the most active second mortgage lenders in Ontario in 2025 include:

Canadian Mortgages Inc. (CMI)

Magenta Capital

New Haven Mortgage

Alta West Capital

Equitable Bank

Home Trust

First National

Risks and Benefits of Getting a Second Mortgage

Second mortgages can be a powerful tool—but they’re not without risks. It’s important to weigh both sides.

Benefits:

Access to large amounts of money based on home equity

Lower interest rates compared to credit cards or payday loans

Can help improve cash flow and credit score if used for debt consolidation

Can fund important goals like renovations or education

Risks:

Your home is on the line—similar to missing payments on your first mortgage

Higher interest rates and fees compared to first mortgages

A second mortgage is best used as a short- to medium-term solution—not a long-term crutch. Make sure you have a clear repayment plan, whether that’s refinancing later or selling the home down the road.

Can You Get a Second Mortgage with Bad Credit?

Yes—bad credit doesn’t mean you’re automatically disqualified. In fact, one of the biggest reasons homeowners turn to second mortgages is because traditional lenders (like the big banks) turned them down due to credit issues.

Private and B lenders are generally more flexible. They focus on:

How much equity you have in your home

The location and value of the property

Your ability to make the monthly payments, even if income is low or inconsistent

If your credit score is under 600, or even if you’ve had a consumer proposal or bankruptcy in the past, you may still qualify—as long as you have enough equity.

You can expect to pay a slightly higher interest rate if your credit is poor. Lenders will want to be compensated for taking on more risk, but they’ll still consider your application.

Can You Get a Second Mortgage With No Income?

Surprisingly, yes—in certain cases, you can get a second mortgage even with little or no income.

Private lenders in Ontario often look at equity first. If your home is worth $800,000 and you owe $400,000 on your first mortgage, that leaves $400,000 in equity. A second mortgage lender might let you borrow up to 80% of your home’s value (in this case, $640,000 total), so there’s room for a second mortgage of up to $240,000.

That said, even if lenders don’t require traditional income, they still want to know how you’ll make your payments. Some may approve the loan based on:

Rental income

Business or freelance income

Retirement or disability income

Proceeds from a sale or expected refinance

Interest-only payment options, especially short-term

But it’s important to be cautious. Make sure to talk to your mortgage broker about your income situation.

Is It a Good Idea to Get a Second Mortgage?

A second mortgage can make a lot of sense in the right situation—especially when it helps you save money or solve a short-term problem. Here are examples where it could be worth it:

Debt consolidation: If you’re paying 20% on credit cards and can roll that into a 9% home equity loan, the savings are huge.

Home renovations: Using your equity to improve your property can increase its value and your quality of life.

Bridge financing: If you’re buying a new home but haven’t sold your current one yet, a short-term second mortgage can cover the gap.

Emergency needs: When you have urgent expenses and limited options, a second mortgage can provide quick access to funds.

Always talk to a licensed mortgage broker or financial advisor before making a decision. They can walk you through the numbers and help you avoid costly mistakes.