Getting a second mortgage
What's a second mortgage?
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?
- 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
Other useful information
Have additional questions? Speak to a TD Mortgage Specialist now.
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