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Getting a second mortgage
Want to learn more about getting a second mortgage? We’ll break down the basics from what is a second mortgage to different types of second mortgages—to help you figure out the right move for you.
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?
A second mortgage can be used in different situations. Common reasons to take out a second mortgage are:
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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.
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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.
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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.
Second mortgage options
It's important to understand all the financing options that may be available to you when you're considering a second mortgage. Ready to learn more? Let's dive in.
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.