What is the priority difference between a first mortgage and a junior mortgage in Ontario?

Mortgage priority determines who gets paid first from the proceeds of a property sale or enforcement. A first mortgage (first charge on title) has the highest priority among mortgage lenders — when the property is sold, the first mortgage lender is repaid before any other registered charges. A second mortgage sits behind the first and is repaid only after the first is fully satisfied.

Priority is generally established by registration order at the Ontario land registry, with some exceptions. A lender with a later registration date normally ranks behind earlier registrations. This is why lenders undertake title searches before advancing funds — they need to confirm exactly where they rank relative to other charges, including tax arrears, executions, and construction liens.

For borrowers, understanding priority matters because a second mortgage lender takes on more risk than a first mortgage lender and compensates for that with a higher interest rate. If the property is sold in a power of sale and the proceeds are insufficient to repay all charges, second and subsequent lenders may recover only a fraction — or nothing. Private second mortgage lenders price their loans to reflect this risk. Always know how many charges exist on a property's title before accepting any financing secured against it.