The interest rate is only part of what a second or private mortgage costs. Lender fees, brokerage fees, legal costs, appraisal, registration and discharge all add to the total — and on a short term, fees can matter more than the rate. Always ask for the total dollar cost over the expected term and the net amount you will actually receive.
How second-mortgage rates are set
Second mortgages sit behind the first mortgage in priority. If the property were ever sold under enforcement, the first mortgage is paid before the second. That additional risk is the main driver of the rate. Beyond position, lenders weigh the combined loan-to-value, the property type and location, how readily the property would sell, your payment history and the strength of the exit plan.
How private-mortgage rates are set
Private lenders price primarily on the property and the equity rather than on income and credit score. A lower loan-to-value on a readily marketable property in a well-populated area generally prices better than a high loan-to-value on an unusual or rural property. Position matters too: a private first generally prices below a private second.
The costs to ask about
| Cost | What it is | When it applies |
|---|---|---|
| Interest rate | Ongoing cost of the borrowed funds | Throughout the term |
| Lender fee | Charged by the lender to place the mortgage | Usually deducted from the advance |
| Brokerage fee | Charged for arranging the mortgage, where applicable | Disclosed before you commit |
| Legal fees | Lawyer preparing and registering the mortgage | On closing |
| Appraisal | Independent assessment of property value | Usually up front |
| Registration | Registering the charge on title | On closing |
| Discharge | Removing the charge when repaid | At payout |
| Renewal fee | Charged if you renew at maturity | Only if you renew |
| Interest reserve | Portion of the advance held back to cover payments | Some private arrangements |
| Late charges | Applied to missed or late payments | As set out in the commitment |
Why fees matter more on a short term
A fee spread over five years is a modest annual cost. The same fee over a one-year term is a substantial one. This is why comparing two short-term offers on rate alone can be misleading: the offer with the lower rate may carry higher fees and cost more in total over twelve months.
The comparison to insist on is total dollars paid over the term, alongside the net advance — what actually reaches you or your creditors after every deduction.
Keeping your first mortgage vs. replacing it
If you refinance, the new rate applies to the entire balance and a prepayment penalty usually applies. If you take a second mortgage, the higher rate applies only to the new funds and the first mortgage is untouched. Which is cheaper depends on your existing rate, the size of the penalty, how much you need and how long you need it for. See the comparison page for a worked illustration.
Why this page shows no rate table
Rates for second and private mortgages are not standard products. They depend on the property, the position, the loan-to-value, your circumstances and the lender’s appetite at that moment. Publishing a headline rate without those conditions attached would be misleading, so we don’t. What you should expect instead is a clear, itemised breakdown of rate and every fee before you commit to anything.
Before you sign, ask for
- The interest rate and how interest is calculated
- Every fee, itemised, with who receives it
- The net advance you will actually receive
- The exact monthly payment and what it covers
- Total dollar cost over the full term
- Prepayment terms — whether it is open or closed, and any penalty
- Renewal terms and any renewal fee
- What happens if a payment is late
This page is general education about mortgage options in Ontario. It is not legal, accounting, tax or insolvency advice, and it is not an offer of credit. Please seek independent professional advice for your own situation.