Second Mortgage Calculator Canada | Home Equity Loan

A second mortgage is a loan secured against your home that you take out while your first mortgage stays in place. The calculator below works out how much room you have for one at a given loan-to-value limit and what it costs each month, interest-only or amortized. It is part of the refinancing and home equity guide; the home equity loan guide and mortgage vs home equity loan vs HELOC cover the other ways to borrow against your home.

Second Mortgage Calculator

How the calculator works

• Room for a second mortgage = home value × the combined loan-to-value limit − your first mortgage balance. The limit starts at 80%, the federal limit for banks explained below; change it if your lender quotes a different limit.
• Combined loan-to-value = (first mortgage + second mortgage) ÷ home value.
• Payments use half-yearly (semi-annual) compounding, the way the Interest Act requires a blended-payment mortgage to state its rate (“calculated yearly or half-yearly, not in advance”). The monthly rate is (1 + annual rate ÷ 200)^(1/6) − 1. The interest-only payment is the loan × that monthly rate; the amortized payment is the standard blended payment over the amortization you enter.
• Interest over the term is what you pay in interest during the term you enter (one year by default); the balance at the end of the term is what you would then repay, renew or refinance.

The rate field starts at the Bank of Canada’s average rate on new uninsured fixed mortgages with terms of 5 years or more, 4.49% for July 2026. That is a first-mortgage benchmark: the Financial Consumer Agency of Canada (FCAC) describes second-mortgage rates as “Fixed or variable. Generally higher than on the first mortgage”, so replace it with the rate you are quoted. The home value, balances, amortization and term fields start at example figures.

How much you can borrow

FCAC lists the limit for a second mortgage as 80% of the appraised value of your home, minus the balance of your mortgage. At a bank, the cap is set in federal law: Under the Bank Act, a bank's loan to buy, renovate or improve a home, or a refinance of such a loan, together with any mortgage ranking equal to or ahead of it, can't exceed 80% of the home's value. The limits are measured against the home's value, which the lender usually sets with an appraisal.

How a second mortgage ranks behind the first

FCAC: “While you pay off your second mortgage, you also need to continue to pay off your first mortgage. Interest rates on second mortgages are usually higher than on first mortgages because they are riskier for lenders.” The order in which lenders are repaid when a home is sold shows where a second lender stands. In Ontario, for example, when a mortgage lender sells a home under a power of sale, the Mortgages Act (section 27) has the money applied, after the costs of the sale and the interest and costs owing, in discharge of all the principal money then due in respect of the mortgage that was enforced, and then in payment of the amounts due to the subsequent encumbrancers according to their priorities (such as a second mortgage), then any tenants’ rent deposits owed, with any residue paid to the owner (Mortgages Act, s. 27).

Because the home secures both loans, FCAC warns that you may face serious consequences, like the foreclosure of your home, if you can't pay back the money you borrow.

Second mortgage vs HELOC vs home equity loan

FCAC compares the ways to borrow against your home this way:

Source: FCAC, Borrowing against home equity, Table 1, checked October 1, 2026.

A refinance is the other option: it replaces your first mortgage with a larger one, so the whole balance moves to the new rate, and breaking the old mortgage before its term ends can cost a prepayment penalty. A second mortgage leaves the first mortgage and its rate untouched. The trade-offs:

The refinance steps are in how to refinance your mortgage, and the HELOC calculator works out a HELOC’s limit and interest.

Second mortgage costs

FCAC lists the fees for borrowing against home equity as appraisal fees, title search fees, title insurance fees and legal fees. Ask each lender for its own fees in writing as well. To compare offers, add the fees to the interest over the term:

Monthly payment examples

Monthly payments on a $100,000 second mortgage at hypothetical rates, with half-yearly compounding. Amortized payments are over 25 years. Payments scale with the amount: a $200,000 loan costs twice as much a month.

An interest-only payment leaves the full balance owing at the end of the term; an amortized payment pays some of it down each month.

When the term ends

Before signing, it helps to know how the balance will be repaid when the term ends:

Questions to ask a lender

Related resources

• Refinancing and home equity guide
• Home equity calculator
• HELOC calculator
• Mortgage refinance calculator
• Debt consolidation using home equity
• Bridge financing calculator