Second Mortgage Costs and Fees in Ontario

The rate is only part of what a second mortgage costs. Setup fees are normal in this corner of lending — the problem is when nobody lists them until the end. This page lists every cost you should expect, with typical Ontario ranges, so you can compare the true total before you sign anything. Your actual quote will show exact figures in writing. All rates and fees are subject to approval and can change without notice.

The Interest

Second mortgage rates at ABC Mortgages start from 6.50% — see the current second mortgage rates for the full picture. Many second mortgages are paid interest-only during their term (often one year), which keeps the monthly payment low but means the balance doesn’t shrink until you repay or renew it. If you’re comparing offers, compare the rate and whether payments are interest-only or amortized.

The Setup Fees

  • Appraisal fee — typically $300 to $500. The lender needs a current, independent value for your home. This is usually the one fee paid upfront.
  • Legal fees and disbursements — typically $1,500 to $2,500. A lawyer registers the second mortgage charge on your title, runs the title search, and handles the funding. Disbursements (registration, title insurance, courier and search costs) are usually included in this range.
  • Lender fee — varies by lender. Alternative lenders may charge a modest fee; private lenders commonly charge a fee expressed as a percentage of the loan amount. It should always be quoted in writing before you commit.
  • Broker fee — depends on the file. On many alternative-lender files the lender pays the broker. On private files a broker fee may apply — if it does, we disclose it upfront, in writing, before you sign.
  • Discharge fee — typically a few hundred dollars, later. When the second mortgage is paid off, the lender charges a fee to remove the charge from title. Ask about it now, not then.

Fees You Should Not Pay

  • Large “application” or “processing” fees demanded before any approval, beyond a standard appraisal
  • Any fee a lender or broker won’t put in writing
  • Fees that only appear at the lawyer’s office on signing day

If a quote looks cheap on rate but the fees were never itemized, it isn’t cheap — it’s incomplete.

A Worked Example

So the numbers mean something, here’s an illustration only — your figures will differ:

  • Second mortgage: $60,000, one-year term, interest-only
  • Example rate: 10% (private-lender territory; stronger files price lower)
  • Interest over the year: $500/month, $6,000 total
  • Setup fees, all-in example: about $3,000 (appraisal, legal, lender/broker fees)
  • Total cost of borrowing for the year: about $9,000, with the $60,000 balance due or renewed at term’s end

Compare that honestly against the alternative you’re weighing — for example, $60,000 sitting on credit cards at 19%+ costs over $11,000 a year in interest alone, with no fees required to keep paying it.

How to Compare Two Offers

  1. Add the interest for the full term to every fee — that’s your total cost.
  2. Check whether payments are interest-only or amortized.
  3. Ask what it costs to exit: discharge fee, and any prepayment penalty if you pay it off early.
  4. Get the whole thing in writing before you sign. If a lender won’t, walk away.

Frequently Asked Questions

Are the fees added to my loan or paid out of pocket? Usually just the appraisal is paid upfront. Most other fees can be deducted from the mortgage advance, so they don’t come out of your pocket at closing — confirm this on your quote.

Is there a penalty if I pay the second mortgage off early? It depends on the lender and term. Some second mortgages are fully open; others charge a few months’ interest. We flag it on every quote so there are no surprises.

Why do private lenders charge a lender fee? It’s part of how private capital is priced — the fee compensates the lender for underwriting and funding a file the banks declined. What matters is that it’s disclosed and counted in your total cost.

Can any of these fees be negotiated? Sometimes. Lender fees in particular can have flexibility on strong files. Part of a broker’s job is pushing on them — ask us what we were able to move on your file.

How do I know the total before I commit? Your commitment letter and our fee disclosure list everything. If any number isn’t in writing before signing day, don’t sign.

Direct: 647-627-8648 · Toll-Free: 1-800-820-5188 · Principal Broker Lic. #M13001328 · Allen Brothers Circle Inc. — Brokerage Licence #13392 · 2540 William Jackson Dr, Pickering, ON L1X 0E4

Want your true total, in writing? Apply now or call 647-627-8648 (direct) / 1-800-820-5188 (toll-free). Free consultation, zero pressure.

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