Commercial Second Mortgage in Canada

Second Mortgages for Commercial Properties

A commercial second mortgage lets you put your equity to work while your first mortgage stays in place, its rate and prepayment terms untouched. Most banks will not register behind another lender, so these deals get done through private lenders and mortgage investment corporations. We know who they are, what they fund, and what they charge. Tell us your first mortgage balance and roughly what the property is worth, and we will tell you what is on the table.

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Commercial Second Mortgage Canada

Up to 75%

Loan-to-Value

$100k – $100m

Mortgage Amount

Interest Only

Amortization Length

Prime + 3% to 6%

Rate Estimate ⓘ

Why Use a Broker

Why a Commercial Second Mortgage Rarely Comes From a Bank

Second-position lending is a different business from first mortgages, and most institutions sit it out entirely. The lenders who do fund second mortgages are private, relationship-driven, and rarely listed anywhere a borrower can find them. That is the gap a broker fills. Here is what changes when you stop calling lenders one at a time.

Going Direct to Lenders

  • Your own bank almost certainly will not register in second position, so the first few calls end in a polite no.
  • The lenders who do fund second mortgages are private and hard to reach without an introduction.
  • You negotiate rate, fees, and term against no benchmark, so you cannot tell whether the quote is fair.
  • You may not learn that your first mortgage requires the lender’s consent until an appraisal is already paid for.
  • A single lender’s appetite decides the whole outcome.

Working With Cedar Commercial

  • We go straight to the private lenders and mortgage investment corporations that actually fund second mortgages.
  • We read your first mortgage terms first, so consent requirements and combined-LTV limits are handled before anyone sees your file.
  • We bring back several term sheets, which gives you a real basis to compare pricing and push fees down.
  • We structure the lien priority and consent correctly up front, so the deal does not unravel at the title search.
  • You get a market, not a single opinion.
Our Process

From Equity Review to Funds in Your Account

Every second mortgage carries one moving part a first mortgage does not: the lender already registered on title. We manage that relationship so it never stalls your deal. Here is how a file moves from first call to funding.

Step 1

Review the Equity and the First Mortgage

We start with the three numbers that govern everything: the property’s current value, the balance on your first mortgage, and the room between them. Measured against the lender’s combined loan-to-value ceiling, that room sets the most a second mortgage can deliver.

Step 2

Match the Deal to the Right Lenders

With the property, the use of funds, and your exit plan in hand, we approach the private lenders and mortgage investment corporations whose criteria fit your file. Second-position lenders are selective and specific, so the match matters as much as the pitch.

Step 3

Handle Consent and Confirm Combined LTV

Most first mortgages require you to notify or get consent from the first lender before a second charge registers. We identify that requirement early, manage the request, and confirm the combined leverage stays inside the second lender’s limit.

Step 4

Close in Second Position and Fund

Once you accept a term sheet and diligence clears, the second mortgage registers behind the first on title and funds. Counsel on both sides confirms the priority is clean, and the proceeds are yours to put to work.

Common Uses

What a Commercial Second Mortgage Can Fund

A second mortgage is one of the more flexible tools in commercial financing. What ties these uses together is meaningful equity in the property and a clear plan to repay the loan, usually inside one to three years. These are the situations we place most often.

Equity Take-Out

Turn appreciation into usable cash without refinancing a first mortgage you would rather keep. The most common reason owners call us, and the simplest to underwrite when the equity position is clear.

Renovations and Tenant Improvements

Fund the capital work that protects or grows rental income, from a roof or HVAC replacement to the buildout that lands a new anchor tenant. Lenders look favourably on proceeds that lift the property’s income.

Partner and Shareholder Buyouts

Raise the capital to buy out a partner’s stake in a property or holding company without disturbing the senior debt or forcing a sale.

Debt Consolidation

Fold higher-cost junior debt or business obligations into a single secured facility, often at a lower blended cost than the debt it replaces.

Acquisition Capital

Pull equity from an asset you already own to fund the down payment or capital stack on your next purchase. A frequent move when using a second mortgage for business growth across a portfolio.

Bridge to Refinance or Sale

Cover a short-term need while you arrange permanent financing or ready an asset for sale. When speed is the priority, a commercial bridge loan can work alongside or in place of a second mortgage.

Our Coverage

Where We Arrange Commercial Second Mortgages

We place second mortgages across British Columbia, Alberta, and Ontario, working with lenders who know each market and how local values hold up. Second-position lending leans heavily on the appraised value, so a lender’s confidence in a market directly affects how much equity you can actually reach.

Commercial Mortgages in British Columbia

British Columbia

We arrange second mortgages on commercial properties throughout BC, from Metro Vancouver and the Fraser Valley to Victoria, Kelowna, and the broader Okanagan. The province’s high property values often mean large amounts of trapped equity, which makes second-position financing especially useful for owners protecting a low-rate first mortgage they do not want to break.

Commercial Mortgages in Alberta

Alberta

Across Calgary, Edmonton, Red Deer, and Lethbridge, we source second mortgages for owner-operators and investors putting equity to work. Alberta’s mix of industrial, retail, and multi-unit residential assets gives second-position lenders a range of property types they are comfortable financing.

Commercial Mortgages in Ontario

Ontario

From the Greater Toronto Area to Ottawa, Hamilton, and London, we arrange second mortgages across the country’s deepest commercial market. Ontario also holds the largest pool of private lenders and mortgage investment corporations in Canada, which means more competition and better terms on a well-prepared file.

Why Cedar

A Broker Who Works the Private Lending Market Daily

Second mortgages live in the private and alternative market, where the right relationship and a properly structured file decide the outcome far more than any posted rate. This is the part of the business we work in every day. Here is what that means for your deal.

We Know the Lenders Who Actually Fund Second Position

Most banks and credit unions will not touch a commercial second mortgage. We hold active relationships with the private lenders and mortgage investment corporations that will, so your file lands with people likely to fund it instead of a string of dead ends.

We Structure the Deal Before Anyone Says No

We read your first mortgage terms, flag any consent or subordination requirement, and confirm the combined structure before approaching lenders. That groundwork is what keeps a deal from collapsing once due diligence starts.

We Tell You When a Second Mortgage Is the Wrong Move

Sometimes a refinance or a private first mortgage serves you better, and we will say so. We model the real cost of each path against your actual terms, even when the honest answer is a smaller deal for us.

Frequently Asked Questions

A commercial second mortgage is a loan registered against a commercial property that already carries a first mortgage. It sits behind the first on title, which means that in any sale or default the first lender is paid in full before the second lender sees a dollar. That subordinate position is why the rate is higher than on a first mortgage. The payoff is that you reach your equity without breaking, repricing, or paying out the loan you already have. Experienced owners use it deliberately, not as a last resort, when keeping the first mortgage in place is worth more than the premium on second-position capital

The active market is private lenders, mortgage investment corporations (MICs), and a handful of alternative lenders. Most banks and credit unions will not register in second position at all, which is why owners who start with their own bank usually hit a wall. These private lenders price for the added risk, but they assess deals on equity and exit rather than rigid formulas, and they move quickly. Because their terms vary widely, the real value of a broker here is bringing several offers to the table at once instead of leaving you with one lender’s number.

It comes down to combined loan-to-value: the total of your first and second mortgage balances measured against the property’s current appraised value. Most second mortgage lenders advance to a combined 70 to 80 percent, with the top of that range reserved for well-located, income-producing assets. Your available second mortgage is the space between your current first mortgage balance and that ceiling. One caveat worth knowing up front: lenders also confirm the property’s net operating income can service both loans, so a tight-cash-flow property can qualify for less than the equity math alone suggests

Yes, and it is one of the most common reasons owners pursue one. As long as the property carries enough equity, you can draw capital for working capital, equipment, an acquisition, a partner buyout, or consolidating business debt. Lenders will ask how you plan to use the proceeds, because a clear, income-producing purpose makes for a stronger file and usually better terms. When the borrowed funds are used to earn income from a business or property, the interest is generally deductible under Canada Revenue Agency rules, though you should confirm your own situation with a tax advisor

Expect rates from roughly 9 to 15 percent, depending on the lender, the property, and how much combined leverage the deal carries. Terms are short to medium, usually one to three years, and most are interest-only to keep payments manageable while you execute your plan. A second mortgage is built as a bridge to a defined exit, whether that is a refinance, a sale, or cash flow, so lenders want to see how the loan gets repaid before they commit. If you do not have a clear exit, that is usually a sign to rethink the structure

In most cases, yes. You either notify the first lender or obtain their consent before a second charge is registered, because the requirement is written into your existing mortgage. Most institutional first lenders will consent as long as combined leverage is reasonable and you are in good standing, though some attach conditions. Registering a second charge without meeting a required consent can breach your first mortgage covenants and give that lender grounds to call the loan, so it is handled formally and in writing. We review your first mortgage terms and manage this step before approaching any second-position lender

Generally no. Loans insured through programs such as CMHC MLI Select prohibit registering subordinate financing on the insured property for the life of the loan, and placing a second charge without approval would breach those terms and can trigger repayment of the insured loan. The restriction comes straight from CMHC insurance requirements. To access equity on a CMHC-insured asset, the realistic paths are refinancing the insured loan itself or pulling equity from a separate, conventionally financed property

It depends entirely on your first mortgage. A second mortgage tends to win when your first carries a below-market rate worth protecting, a steep prepayment penalty, or when you only need a modest amount of capital quickly. A refinance tends to win when the first mortgage is near maturity, already at or above today’s rates, or when you need a large share of your equity in one efficient loan. The mistake is comparing headline rates alone. A second mortgage at 11 percent can easily beat a refinance at 6.5 percent once a six-figure prepayment penalty and a below-market first mortgage are in the math. We run both against your actual terms before you decide

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