Why a Second Mortgage?

Have you already taken out a mortgage to purchase your property? You might consider a second mortgage, also known as a subordinate mortgage. At XPERTO, we are here to guide you through this process. We understand that each homeowner has unique needs, which is why we offer customized solutions to help you achieve your financial goals.

How does it work?

A second mortgage is a home loan that is added to an existing first mortgage. The amount granted is secured by the residual value of the property, after the first mortgage debt has been deducted. Repayment terms are similar to the first mortgage but usually come with a higher interest rate. The second mortgage lender is repaid after the first mortgage lender. For a second mortgage, the maximum term is generally only 5 years. Regarding the amount that can be borrowed, most lenders set the limit at 80% of the property’s value, minus the outstanding balance of the first mortgage. Since each case is unique, it is best to seek advice from XPERTO.
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Comment fonctionne un taux variable

The interest rate of a second mortgage

  • Generally higher than a first mortgage (difference of 0.5% to 3%)
  • Higher risk premium for the lender
  • Depends on the amount borrowed, the borrower’s credit, and the property’s value
  • Fixed or variable rate depending on the type of mortgage
  • Variable rate revised periodically based on a reference index
  • Influenced by economic conditions and key interest rates
  • Application fees often higher than for a standard mortgage
  • Always more expensive than a first mortgage to offset the increased risk
Get the best rate

Thanks to their expertise in mortgages, Xperto mortgage brokers guide each client through the application process, analyze their profile and financial needs, compare offers from lending institutions, and negotiate the best terms suited to their situation to help them obtain the second mortgage they need.

Call us: 1-438-600-9006

The 3 pillars that will influence the application

The net value of the mortgaged property

The higher it is, the greater the chances of obtaining the loan.

This is the most important criterion in the bank’s decision.

The borrower’s income amount.

Income

Stable and sufficient income is required.

It will assure the bank of the borrower’s repayment capacity.

The applicant’s credit score

A healthy credit file is essential.

It helps reassure the bank about creditworthiness.

Quick Pre-Qualification
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Why take out a second mortgage:

  • Renovate your property
  • Consolidate multiple high-interest debts
  • Cover unexpected or exceptional expenses
  • Purchase a vehicle
  • Acquire a second residence without waiting to sell the first
  • Etc.

Advantages and Disadvantages of a second mortgage

Advantages

Disadvantages

Allows you to access cash by using the equity in the property

Higher interest rate than a first mortgage

Lower interest rate than other forms of credit (credit card, line of credit, personal loan, etc.)

Higher monthly payments than a conventional loan

Flexible repayment term (up to 15–20 years)

Risk of over-indebtedness if payments are too high

Access to amounts of up to 80% of the property’s value

Reduces future borrowing capacity by lowering equity

Wide selection of lenders offering this type of loan

Wide selection of lenders offering this type of loan

More complex and restrictive process than a first mortgage

First mortgage is repaid first

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Second mortgage