Can I Refinance My Second Mortgage Later?
Yes. In many cases, refinancing the second mortgage later should be part of the plan from the beginning. A second mortgage is often used as short-term financing while you improve whatever is preventing better financing today.
← Back to Second Mortgage QuestionsA Second Mortgage Can Be a Bridge to Better Financing Later.
The objective is often to solve an immediate financing problem, strengthen the overall file during the term and then refinance the second mortgage when lower-cost or more conventional financing becomes available.
Combine Both Mortgages Later
You may eventually be able to refinance the first and second mortgages into one new first mortgage when the numbers and qualification make sense.
Refinance Only the Second
If the existing first mortgage has favourable terms, it may make more sense to leave it in place and replace only the second mortgage.
Improve Your Credit
A stronger credit profile can increase lender options and potentially improve the cost of the replacement financing.
Reduce Other Debt
Lower unsecured debt can improve debt-service ratios and strengthen the next mortgage application.
Strengthen Income Qualification
More stable or better-documented income can help move the file toward conventional or lower-cost financing.
Build a Clean Mortgage History
Making the first and second mortgage payments as agreed helps create a stronger file for the eventual refinance.
Know How You Plan to Get Out Before You Go In.
Second mortgages are often higher-cost and shorter-term financing. That makes the exit strategy an important part of the decision before the mortgage is arranged.
The plan may be to refinance both mortgages together, replace only the second, repay it from another source or sell the property. The right strategy depends on the first mortgage, the second mortgage and what is expected to change during the term.
Coordinating the refinance with the first mortgage maturity can sometimes avoid unnecessary penalties.
The cost of breaking the first or second mortgage early needs to be included in the refinance analysis.
The second mortgage's maturity date should be known and planned for well before the balance becomes due.
The strategy should identify what is expected to improve during the term and how that will create better financing options.
A Stronger File Can Open the Door to Lower-Cost Financing.
The refinance becomes easier when the factors that caused the need for the second mortgage have improved and the property still has sufficient equity.
Better Credit
Improved credit and a clean recent payment history can increase the number of lenders willing to consider the refinance.
Lower Debt
Reducing credit cards, loans and other obligations can improve both cash flow and debt-service qualification.
Stronger Income
Improved or better-documented income can make conventional qualification more realistic.
More Property Equity
A higher property value or lower mortgage balances can improve the combined loan-to-value and create more lender options.
Clean Mortgage Payments
A strong payment history during the second-mortgage term can help demonstrate that the original problem has been resolved.
Better Timing
Waiting until the first mortgage is closer to maturity may make the overall refinance more economical than breaking it early.
Do Not Let the Second Mortgage Maturity Sneak Up on You.
A second mortgage should often be viewed as a bridge. Use the term to improve the file, then review the refinance options well before maturity. The goal is to move into better and less expensive financing as soon as doing so makes financial sense.
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