Second mortgage rates and fees in Toronto: how pricing actually works

Why the rate is higher than your first mortgage

If a property is sold or enforced against, the first mortgage is paid in full before the second lender sees a dollar. That subordinate position is the entire reason for the price difference. The thinner the equity cushion behind the first, the more the second lender charges.

What moves your number

Two homeowners on the same street can get very different pricing on the same loan amount.

• Combined loan-to-value - the single biggest factor
• Property type and marketability: detached Toronto homes price better than rural or unusual properties
• Whether the first mortgage is current and in good standing
• Credit profile and whether there are collections, arrears, or a consumer proposal
• Loan size - very small loans carry proportionally higher fees
• Strength and credibility of the exit plan

The fees you should expect to see

A clean second mortgage commitment lists every cost. If a number is missing, ask before you sign.

• Lender fee, usually a percentage of the loan amount
• Brokerage fee, disclosed separately
• Appraisal cost
• Your own legal fees plus, on many files, the lender's legal costs
• Independent legal advice where the lender requires it

Compare the total cost, not the rate

A slightly lower rate with a heavier fee can cost more over a twelve-month term than the reverse. Ask for the total cost of borrowing over the actual term, in dollars. That single number makes competing offers comparable in seconds.

Frequently asked questions

Why will you not publish second mortgage rates?

Because any posted number would be wrong for most people. Pricing depends on your equity position, property, and file, and it changes constantly. We quote in writing after we look at the specifics.

Are second mortgage fees negotiable?

Sometimes. Competing offers from multiple lenders are what create leverage, which is why shopping the file matters more than haggling with one lender.