Refinance: cheaper money, higher bar
One new first mortgage at mortgage-market pricing, amortized over decades. You requalify under the stress test, pay a penalty if you break mid-term, and wait two to four weeks. Best when your current rate is unattractive, your term is nearly up, or you comfortably qualify.
Second mortgage: costlier money, fewer conditions
A lump sum registered behind the first, approved on equity, funded in days, on a short interest-only term. Best when you hold a low-rate first mortgage worth protecting, when a bank has already declined you, or when the timeline is measured in days.
Four questions that settle it
Work through these in order and the answer is usually clear.
- What is the exact penalty to break your current mortgage?
- How far are you from your maturity date?
- Would a bank approve you today on income and credit?
- How fast do you need the funds?
The hybrid path most files end up taking
Take a short second mortgage now to solve the immediate problem, keep payments clean for twelve months, then refinance everything into one new first mortgage at maturity with no penalty. You get the speed now and the cheap money later.
Frequently asked questions
- Is a second mortgage always more expensive?
- In rate terms yes, but over a twelve-month window a second mortgage can cost less than a large IRD penalty on a fixed-rate refinance. Compare total dollars over the same period.
- Can I refinance out of a second mortgage later?
- That is the standard exit. Both mortgages are consolidated into one new first mortgage once credit or income supports it.