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Nothing says “Welcome to Adulthood” like buying your first house. Getting into the real estate market offers tangible and intangible benefits. You have your pride and joy with a place to call your own along with all the financial advantages.

As your equity grows, more opportunities open up to you. You might eventually sell your existing home to upgrade to something larger or downsize to a vacation paradise. Or – you could use your first foray into real estate to start thinking like an investor.

Instead of selling your home, you buy a new one and expand your portfolio. This could be a business decision to grow your wealth or plan for a successful retirement, with buying a second home and renting out the first as an option.

Your decision could also be for pure pleasure, a home-away-from-home in a gorgeous destination. Whatever your goals, there are both opportunities and risks to be aware of. Should you buy a second home in Ontario? Let’s explore the possibilities. (Please note: this post is for informational purposes only and is not intended to be financial or legal advice.)

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Calculating Your Equity

Before you begin the search for your next dream home or investment opportunity, we’ll start with a quick review of what equity means in real estate.

The simple definition is the value of your property minus what you owe on it. If you put a 20% down payment on your original home, you began with 20% equity. Over time, your mortgage payments get divided between interest and the principal. Every dollar towards the principal increases your equity.

Now let’s look at real estate appreciation, where the real value lies. Though property prices can fluctuate here and there, they do tend to rise given enough time. Every increase represents greater equity growth.

Imagine you bought a house years ago at $338,755, which was the national average in 2015 (excluding Toronto and Vancouver). In 2025, housing values rose to $687,898, even accounting for economic uncertainty due to tariffs and other world events.

Presuming your home followed the trends, you would have seen an equity gain of more than $349K – just from appreciation alone. There’s a reason real estate remains a favoured investment vehicle during good economic times and bad!

To calculate your current home equity, simply take the approximate value that it would sell for in today’s market minus your outstanding mortgage balance and any other associated debts. Based on your loan-to-value ratio, you can get an idea of how much you might be able to borrow against your existing home, usually through a second mortgage.

Are you planning to buy a home in Thornbury or the South Georgian Bay area? You can see all of our featured listings right here.

Second Home Mortgage Rules: Canada

A second mortgage is different from refinancing where you terminate the contract and begin a new one. Instead, it’s an additional loan that is completely separate from your first mortgage. It will have its own distinct terms, interest rate, and schedule while you are still paying off your existing home.

Most traditional banks will provide maximum funding of 80% of the appraised value of your existing home and subtract the balance of your mortgage. Private lenders will have their own rules. They could be less stringent about the qualification criteria but come with higher interest rates.

There are two types of second mortgages that are common with real estate investors.

  • Home Equity Loan: You repay based on a fixed schedule. Once your amortization period ends, the loan should be paid off in full.
  • Home Equity Line of Credit: You can borrow money when and if you need it, and in the amount you want up to the maximum. You pay interest only on what you borrow. This type of loan comes with more flexibility, but can also lead to temptation. You’ll want to avoid using it as an easy source of cash; otherwise, you might find yourself stuck in a revolving cycle of debt.

In the event of non-payment, the first mortgage lender takes priority, which means a higher level of risk for the second lender. As a result, interest rates can also be higher. Some of this risk also gets passed on to you as the borrower.

In a worst-case scenario, the bank could reclaim your first home if you default on your second mortgage since it’s used as collateral. It’s always critical that you assess your income and savings before incurring more debt. If challenging times arise, you want to be sure you can manage the additional risk.

A review of the process never hurts, whether you’re buying your first house or your tenth. The posts below can give you a quick refresher:

How to Buy a Second Property

Buying a second house without selling the first can seem more straightforward than it was with your original transaction. On the one hand, it feels a little easier because you’ve been through the process before. You know the routine: assess the market, create your wish list, be prepared to negotiate, and start the search.

On the other hand, owning multiple properties requires a higher level of financial planning and finesse. There could also be tax implications as you’re no longer under the primary resident exemption, but that’s a different topic altogether.

Whether buying a second house is a good idea depends on your individual circumstances. An experienced real estate agent with a history of working with investors can help you determine what is best for your long-term goals.

Do you want customized advice to help you decide where and when to buy your next home? Our top Thornbury real estate agents are happy to help! Reach out to 705.888.2888 or email Mike@TheKearnsGroup.ca to take the first step.