What is a Second Mortgage?

Cynthia Dreger • February 21, 2024

If you're not all that familiar with the ins and outs of mortgage financing, the term "second mortgage" might cause a bit of confusion. Many people incorrectly assume that a second mortgage is arranged when your first term is up for renewal or when you sell your first home. They think that the next mortgage you get is your "second mortgage." This is not the case.


A second mortgage is an additional mortgage on a single property, not the second mortgage you get in your lifetime.


When you borrow money to buy a house, your lawyer or notary will register your mortgage on the property title in what is called first position. This means that your mortgage lender has the first claim against the sale proceeds if you sell your property. If you happen to default on your mortgage, this is the security the lender has in repossessing your property. A second mortgage falls in behind the first mortgage on your property title.


When you sell your property, the lawyers will use the sale proceeds to pay off your mortgages in sequence, the first position mortgage is paid out first, and the second mortgage is paid out second. After both mortgages are paid off completely, you get the remaining equity.


When you secure a second mortgage, you continue making payments on your first mortgage as per your mortgage agreement. You must also then fulfill the terms of the second mortgage. 


So why would you want a second mortgage? Well, a second mortgage comes in handy when you're looking to access some of your home equity, but you either have excellent terms on your first mortgage that you don't want to break, or you’d incur a huge penalty to break your first mortgage. Instead of refinancing the first mortgage, a second mortgage can be a better option. 


A second mortgage is often used as a short-term debt consolidation tool to help provide you with better cash flow. If you’ve accumulated a considerable amount of high-interest unsecured debt, and you have equity in your home, you can secure a second mortgage to lower your overall cost of borrowing. 


If you'd like to know more about how a second mortgage works, or if you'd like to discuss anything related to mortgage financing, please connect anytime!

CYNTHIA DREGER

Standard or Collateral Charge Mortgage. What’s best for you?

By Cynthia Dreger • June 25, 2025
When arranging mortgage financing, your mortgage lender will register your mortgage in one of two ways. Either with a standard charge mortgage or a collateral charge mortgage. Let’s look at the differences between the two. Standard charge mortgage This is your good old-fashioned mortgage. A standard charge mortgage is the mortgage you most likely think about when you consider mortgage financing. Here, the amount you borrow from the lender is the amount that is registered against the title to protect the lender if you default on your mortgage. When your mortgage term is up, you can either renew your existing mortgage or, if it makes more financial sense, you can switch your mortgage to another lender. As long as you aren’t changing any of the fine print, the new lender will usually cover the cost of the switch. A standard charge mortgage has set terms and is non-advanceable. This means that if you need to borrow more money, you'll need to reapply and requalify for a new mortgage. So there will be costs associated with breaking your existing mortgage and costs to register a new one. Collateral charge mortgage A collateral charge mortgage is a mortgage that can have multiple parts, usually with a re-advanceable component. It can include many different financing options like a personal loan or line of credit. Your mortgage is registered against the title in a way that should you need to borrow more money down the line; you can do so fairly easily. A home equity line of credit is a good example of a collateral charge mortgage. Unlike a standard charge mortgage, here, your lender will register a higher amount than what you actually borrow. This could be for the property's full value, or some lenders will go up to 125% of your property's value. In the future, if the value of your property appreciates, with a collateral charge mortgage, you don't have to rewrite your existing mortgage to borrow more money (assuming you qualify). This will save you from any costs associated with breaking your existing mortgage and registering a new one. However, if you’re looking to switch your mortgage to another lender at the end of your term, you might be forced to discharge your mortgage and incur legal fees. Also, by registering your mortgage with a collateral charge, you potentially limit your ability to secure a second mortgage. So what’s a better option for you? Well, there are benefits and drawbacks to both. Finding the best option for you really depends on your financial situation and what you believe gives you the most flexibility. This is probably a question better handled in a conversation rather than in an article. With that said, undoubtedly, the best option is to work with an independent mortgage professional. It’s our job to understand the intricacies of mortgage financing, listen to and assess your needs, and recommend the best mortgage to meet your needs. As we work with many lenders, we can provide you with options. Don’t get stuck dealing with a single institution that may only offer you a collateral charge mortgage when what you need is a standard charge mortgage. So if you’d like to have a conversation about mortgage financing, please get in touch. It would be a pleasure to work with you and answer any questions you might have.

First-Time Homebuyer? A New GST Rebate Could Put Thousands Back in Your Pocket

By Cynthia Dreger • June 20, 2025
If you’re a first-time homebuyer eyeing a new build or major renovation, there's encouraging news that could make homeownership significantly more affordable. The federal government has proposed a new GST rebate aimed at easing the financial burden for Canadians entering the housing market. While still awaiting parliamentary approval, the proposed legislation offers the potential for thousands in savings —and could be a game-changer for buyers trying to break into today’s high-cost housing landscape. What’s Being Proposed? Under the new legislation, eligible first-time homebuyers would receive: A full GST rebate on homes priced up to $1 million A partial GST rebate on homes between $1 million and $1.5 million This could mean up to $50,000 in tax savings on a qualifying home—a major boost for anyone working hard to save for a down payment or meet mortgage qualification requirements. Why This Matters With interest rates still elevated and home prices holding steady in many regions, affordability remains a challenge. This rebate could offer meaningful relief in several ways: Lower Upfront Costs: Removing GST from the purchase price reduces the total amount of money buyers need to save before closing. Smaller Monthly Payments: A lower purchase price leads to a smaller mortgage, which translates to more manageable monthly payments. Improved Mortgage Qualification: With a reduced purchase amount, buyers may find it easier to meet lender criteria. According to recent estimates, a homebuyer purchasing a $1 million new home could see monthly mortgage payments drop by around $240 —money that could go toward savings, home improvements, or simply everyday expenses. Helping Families Help Each Other This proposal also offers a win for parents who are supporting their children in buying a first home. Whether through gifted down payments or co-signing, a lower purchase price and more affordable monthly costs mean that family support can go further—and set first-time buyers up for long-term success. Is This the Right Time to Buy? If you’re thinking about buying a new or substantially renovated home, this proposed rebate could dramatically improve your financial position. Now is the perfect time to explore your options and make sure your mortgage strategy is aligned with potential policy changes. 📞 Let’s connect for a free mortgage review or pre-approval. Whether you’re buying your first home or helping someone else take that first step, I’m here to help you make informed, confident decisions.