Ontario mortgage help

HELOC vs. refinance vs. second mortgage

Each option uses home equity differently. Compare the amount available, repayment structure, rate exposure, first-mortgage penalty, fees, and a dated repayment plan.

Reviewed September 1, 2026Published by Ontario Mortgage HelpHow we review

What to do first

  1. Estimate the property value and total every mortgage, HELOC, lien, or secured loan already registered.

  2. Define whether funds are needed once or repeatedly and how quickly the balance will be repaid.

  3. Obtain the first-mortgage payout penalty before evaluating a refinance.

  4. Compare total interest, fees, payments, and balances over the same period for all available structures.

Important considerations

A HELOC is revolving creditFunds may be borrowed, repaid, and reused up to the limit. Rates are generally variable, and interest-only minimum payments may leave the principal unchanged.

A refinance replaces or changes the first mortgageIt may provide a lower secured rate but can trigger a prepayment penalty, legal costs, appraisal costs, and new qualification.

A second mortgage leaves the first in placeIt provides a separate lump-sum loan and generally carries a higher rate because the lender is behind the first mortgage in priority.

Official sources

Borrowing against home equityFinancial Consumer Agency of CanadaHome equity lines of creditFinancial Consumer Agency of CanadaBreaking your mortgage contractFinancial Consumer Agency of CanadaShopping for a mortgageFinancial Services Regulatory Authority of Ontario

Related mortgage help

Refinance or consolidate debtCompare cash flow, interest, principal, penalties, and fees.Second mortgageMeasure available equity and the complete borrowing cost.Reverse mortgageCompare cash today with growing debt and reduced future equity.