Jonathan Alphonso
3 min readOct 26, 2017

Top Reasons to get an Ontario Second Mortgage

If you need money but aren’t sure which loan product is best, look into second mortgages as they are a cost effective loan type.

Investopedia defines second mortgages as subordinate mortgages made with an initial loan in place. To get these loans the homeowner must have some home equity as they are secured by real estate properties. Home equity can be created from the initial down payment, the appreciation of property’s value and from principal paid down on the mortgage . A second mortgage allows a homeowner to refinance up to 80% of a property’s value.

Loans can help you achieve many goals and objectives. These are the top 5 reasons to get a second mortgage:

1. For investment

An easy way of quickly building your investment portfolio would be to take a second mortgage. With an RRSP, for example, you can maximize contributions and gain a hefty refund. It could also be used for a pension buyback, which usually involves large amounts of funds. Second mortgages allow you to make payments in small monthly installments.

2. For school

You may feel the need to go back to school in order to facilitate a career change but lack the money for tuition. If you have a house with sufficient equity, consider a second loan to get the money needed to finance your education. This loan can also be used to help you pay for your children’s education.

3. To pay for a second property

Many people take out second mortgages so they can make the down payment for a vacation home or second property. Banks usually demand 20% down payment for a second property and you can raise this money by borrowing against another piece of real estate in your name.

4. For home renovations

Roof, kitchen, bathroom and general home renovations cost lots of money. A second mortgage can indeed come in handy in helping you make these changes by providing the much-needed money.

5. To pay off high-interest loans

Credit cards charge incredibly high-interest rates up to 30%. If you want to save yourself from high interest rates, you should take out a second mortgage. You will enjoy lower interest payments which can help you get out of debts.

How Can You Get a Second Mortgage?

Start by contacting a licensed mortgage broker like the ones at Mortgage Broker Store. From these professionals, you can know whether you qualify for a loan in a matter of minutes. The brokers at this business will negotiate with lenders for you and make sure to get you a loan at the lowest interest rates. Our experts will arrange your monthly payments and get you the money needed for your next project.

Factors to Consider Before Taking out a Second Mortgage

As you think about getting a second mortgage you need to understand that it attracts higher interest than the initial loan. This said, second mortgages are secured loans and therefore more affordable than personal loans. They carry a higher risk for lenders as the initial mortgage holder must be first to be paid in the event of a foreclosure. To mitigate the risk, lenders respond with slightly higher rates but not to worry as these are lower than for secured loans.

There are risks when using your home as collateral for a second mortgage. If the worst happens and you are unable to make payments as agreed, you may have to leave the home. The mortgage act outlines the fact that if you are unable to honor the agreement, second mortgage lenders can take necessary action to recoup their investment. Typically the lender will sell the property using the power of sale. It is important that a homeowner in power of sale act quickly to stop the power of sale process.

Jonathan Alphonso

Mortgage Agent, Web Developer, and Real Estate Investor. Together with Ronald Alphonso I run I write about mortgage related topics.