A second mortgage is a financing option where a lender registers a new mortgage on the title of your property behind your existing first mortgage, allowing you to access your home equity without breaking or refinancing your current loan. Understanding how a second mortgage works is simple: most second mortgages are short-term loans, typically for one year, although some private lenders offer two-year terms. As the term approaches maturity, it’s common for a second mortgage lender to offer a renewal or extension, giving you flexibility if you still need financing. In many cases, second mortgages are structured as interest-only loans, meaning your monthly payments cover only interest and not principal. This is beneficial because, for short-term financing, an interest-only payment is usually less than an amortization loan that requires both interest and principal. Since very little principal is paid down in one or two years, interest-only second mortgage payments often make the most sense for cash flow. At DV Capital, if you have sufficient equity, we can prepay all your second mortgage payments, so you don’t need to make monthly payments, set a custom payment to suit your budget, or even match your second mortgage maturity date to your first mortgage, potentially making refinancing easier. Most second mortgages are closed loans, which means they cannot be paid off early without a prepayment penalty, typically equal to three months of interest. However, as a direct private second mortgage lender, DV Capital works to negotiate reduced penalties. In some cases, eliminate them and provide you with a fully open private mortgage, saving you money if you sell or refinance early. For over a decade, DV Capital has specialized in how second mortgages work for homeowners, real estate investors, and builders across Ontario and British Columbia. We provide second mortgage financing for residential, commercial, industrial, and multi-family properties, offering fast approvals, competitive rates, and flexible terms.