HELOC
Revolving, lowest cost, interest only on what you draw. Requires bank-grade credit and provable income, and the bank normally wants first position. Best when you qualify and want ongoing flexible access rather than a lump sum.
Refinance
Replaces your first mortgage with a larger one. Cheapest long-term borrowing, but you requalify under current rules and may pay a penalty to break your term. Best when your existing rate is not worth protecting and you can qualify.
Second mortgage
Leaves the first mortgage untouched, funds in days, approved on equity. Costs more and runs on a short term. Best when your first mortgage rate is worth keeping, when a bank has declined you, or when the timeline is tight.
A quick decision rule
If you qualify at a bank and your first mortgage rate is high, refinance. If you qualify and want flexibility, HELOC. If you do not qualify, need speed, or hold a low-rate first mortgage you would lose by refinancing, a second mortgage is usually the answer.
Frequently asked questions
- Is a HELOC always cheaper than a second mortgage?
- In rate terms, yes. But a HELOC you cannot qualify for is not an option, and the fees on a short second mortgage term can be less than the penalty on breaking a low-rate first mortgage.
- Can I convert a second mortgage into a refinance later?
- That is the standard exit. Once credit or income is repaired, both mortgages are consolidated into one new first mortgage.
Talk to a Toronto private mortgage specialist
We arrange equity-based financing across Toronto and the GTA, whether you need a first position from a private lender or a second mortgage behind the bank you already have.