Getting a second mortgage

What's a second mortgage?

Happy neighbours gathered outside home, exchanging casserole.

A second mortgage refers to additional financing that would be in second priority to the already registered mortgage on the same property. A Home Equity Line of Credit (HELOC) is a typical choice for a second priority mortgage. If you're looking for this type of mortgage, a TD Home Equity FlexLine may be available to you.

You may also think of a second mortgage as an additional mortgage on a different property, like a rental home or cottage. In this case, you can apply for a new mortgage for your second property.

When getting a second mortgage, it's important to consider your unique financial needs and goals.

Why would you need a second mortgage?

A second mortgage can be used in different situations. Common reasons to take out a second mortgage are:
  • You want to consolidate debt. A second mortgage can be used to pay off your high-interest debt (like credit cards and student loans) so you can focus on paying back a single loan at a potentially lower interest rate.
  • You need to borrow for a major purchase. Say you need to fund a renovation or pay for your child’s education. With a second mortgage, you can use the equity you’ve built in your home to pay for big-ticket items you may not otherwise have the cash for.
  • You want to buy a second property. This could be a cottage, a vacation home or an investment property. Whatever it is, a second mortgage can help you purchase it.

Home Equity Line of Credit (HELOC)

The amount you can borrow with a HELOC is based on the equity you’ve built up in your existing home. With a TD Home Equity FlexLine you may be able to borrow up to 80% of the value of your home.

Let's say your home is appraised for $500,000—80% of that amount is $400,000. If you have $300,000 left on your mortgage, you may be able to borrow up to $100,000.

Refinance your mortgage

Refinancing your existing mortgage may be an alternative to getting a second mortgage, particularly when interest rates are low.

When you refinance you’re basically renegotiating your existing mortgage agreement and accessing the equity you've built in your home. Get in touch with a Mortgage Specialist to talk about the pros and cons of refinancing your mortgage.

Mortgage for a second property

Dreaming of buying a second property like a cottage? At TD, your options can include both a mortgage and a TD Home Equity FlexLine.

Keep in mind that you'll need a down payment for your second property and, if you're going to have two mortgages, you'll want to make sure you budget for the additional mortgage payments, plus utility costs and property taxes.


Buying a second property

If you’re thinking about buying a second house, like an investment property, a second mortgage can help you achieve that goal. Here are a few things to know first:

  • For second properties a down payment of at least 20% is required for a second mortgage.
  • If you or family members are going to live in the second home rent-free, you can pay less than 20% down payment.
  • The Canadian Home Buyers Plan, which allows you to tap into your RRSPs, doesn't apply on a second property.
  • Costs are much the same as your first purchase: valuation fees, legal fees, and registration fees.

How much home can I afford?

Mortgage affordability calculator

Want to understand what size mortgage you can afford? Enter your details into our handy tool to find out how much you might be able to borrow.

Other useful information

Mortgage Payment Calculator

See what your second mortgage payments could be.

Flexible mortgage payments calculator

Try different flexible payment features to manage your mortgage.

TD Home Equity FlexLine

Use the value of your home to access a line of credit.

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