Why credit score matters less in second-position lending
Chartered banks lean heavily on credit scores and income ratios. Private and alternative lenders take a different view: they look at how much equity you have in the property, the property type and location, and whether you have a credible plan to repay or refinance. A 580 score with 40% equity often gets a better hearing than a 720 score with 5% equity.
What "enough equity" usually looks like
As a rough Ontario rule of thumb, second-position lending partners want the combined balance of your first mortgage plus the new second mortgage to land at roughly 75%–80% of the property's appraised value. Below that line, equity-based approval becomes much more likely.
What lending partners will still ask for
- A current appraisal or recent comparable sales
- Confirmation of property taxes paid up to date
- Your current first mortgage statement
- A clear story for how you'll exit the second mortgage — refinance, sale, or income improvement
What it costs
Ontario second mortgages in 2026 generally run in the 9%–14% range with lender fees of 1%–3%. These are general market ranges, not Future Lending Group's rates — we connect you with licensed lending partners who set their own pricing.
Use it as a stepping stone, not a destination
The best use of a bad-credit second mortgage is to stabilize your situation — pay out collections, consolidate high-interest debt, clear arrears — and then use 12–24 months to rebuild credit so you can refinance back to a B- or A-lender at a lower cost.