Second and third mortgages in Canada: real rates, real costs
You have equity and you have been declined anyway, usually on debt ratios rather than on the house. A second mortgage is the release valve. It is also expensive money, and the fees can add three to five percentage points to the rate you were quoted.
Combined first, second and third typically capped at 80% of appraised value
Private lenders are not federally regulated, so the stress test does not apply
We publish the all-in effective cost, including lender, broker and legal fees
Six questions. A licensed broker reviews it and comes back with real numbers — not a rate teaser.
Placed with Canada's banks, monolines, credit unions and alternative lenders
TD BankScotiabankRBC Royal BankCIBCBMONational BankMCAPFirst NationalMerix FinancialHome TrustEquitable BankCMLS FinancialRFA MortgageCommunity TrustHaventree BankRadius FinancialB2B BankManulife BankServus Credit UnionMeridian Credit UnionFisgard CapitalCWB OptimumDesjardinsVancityCoast Capital SavingsAlterna SavingsBridgewater BankHomeEquity BankWealth One Bank of CanadaCanadian Western BankTangerineICICI Bank CanadaMarathon Mortgage
Lender names shown for reference. Availability, pricing and guidelines vary by province, property and borrower profile.
A second mortgage is a loan registered against your home behind your existing first mortgage. If the property is ever sold or enforced, the first lender is paid in full before the second sees anything. That ranking risk is the entire reason a second costs more than a first. A third mortgage sits behind both and costs more again.
This page is about second charges against a home you already own. If you are looking to buy a cottage or a second property, that is a different product and a different page. The two get confused constantly, including by competitors, so we have kept them separate.
Most people arrive here after a declined refinance. The equity was there, the debt service ratios were not. Below you will find current Ontario private rate ranges by position and loan-to-value, an honest calculation of what fees do to the effective cost, and the part that matters most: the twelve-month exit plan that gets you out of second-position pricing and back into an A or B lender.
When a second mortgage is the realistic option
Second mortgages are not a first choice. They are what is left when the cheaper doors have closed, and these are the situations that close them.
The refinance was declined on ratios, not on equity
You have 30% equity and the lender still said no, because the stress test qualifies you at your contract rate plus 2% and your total debt service ratio broke through the limit. The house was never the problem.
Your first mortgage rate is far below today's
Breaking a 2.94% first to access $55,000 means repricing the entire balance at 4.29% and paying a penalty. Going behind the first at a higher rate on a smaller amount is often cheaper overall.
CRA has assessed arrears and mentioned a lien
Tax debt does not wait, and a registered CRA lien makes every subsequent financing harder and slower. Clearing it before registration keeps the file lendable.
You have missed mortgage payments and received a notice
Once enforcement starts, legal costs are added to what you owe and the clock is short. A second or third mortgage that cures the arrears is expensive, and it is still far cheaper than losing the property.
Your income is real but does not document
Self-employed income written down for tax, commission income, contract work or a business in its second year. The money arrives every month and no A lender will count it.
A collateral charge is blocking your options
Some lenders register a collateral charge that can block secondary financing behind it, or leave no registered room. This turns what should be a simple second into either a negotiation or a full refinance.
How does a second mortgage work in Canada?
A second mortgage is a separate loan, with its own lender, rate, term and fees, registered in second position on your title. Your first mortgage is untouched: same rate, same payment, same maturity. The second lender takes the risk of being paid after the first, and prices accordingly.
Most private seconds are interest-only with a one-year term. That means the payment is low relative to the balance, but the principal does not fall. On $84,000 at 10.99%, the monthly payment is $769 and the balance is still $84,000 twelve months later. That is a feature, not a defect, provided you have an exit plan for the end of the term.
Institutional seconds, from credit unions and some B lenders, work differently. They tend to be amortizing rather than interest-only, they price lower, roughly 8% to 9%, and they qualify you on income. If you can meet an institutional lender's requirements you should, because the difference over two years is thousands of dollars.
Combined loan-to-value across all charges is conventionally capped at 80% of appraised value
On a $600,000 home that is $480,000 in total across first, second and third
Some private lenders will exceed 80%, at materially higher rates and fees
Private seconds are usually interest-only; institutional seconds are usually amortizing
Terms of six to twelve months are normal on private deals, one to five years on institutional ones
Second mortgage rates in Ontario and across Canada, 2026
Second mortgage rates are set by position and by loan-to-value, not by a single posted number. The further up the loan-to-value scale the lender has to reach, the more it charges, because there is less equity underneath to protect it if the property has to be sold.
The table below reflects Ontario private mortgage rate data updated in May 2026. Rural and small-market properties price higher than urban ones because they are harder to sell. You will see brokerages advertising second mortgages at 7.99%. That pricing exists, but it is a promotional entry rate for low loan-to-value urban files with strong credit, not what a typical borrower at 75% combined loan-to-value with bruised credit will be offered. We would rather show you the range.
Ontario private mortgage rates by position and loan-to-value, updated May 2026
Ontario private mortgage rates by position and loan-to-value, updated May 2026
Position
Rate range
Typical
First, urban, low LTV
8% to 10%
9%
First, rural or higher LTV
10% to 12%
11%
Second, urban
10% to 13%
11.5%
Second, rural
12% to 15%
13%
Construction or development
10% to 14%
12%
How loan-to-value moves the rate
Under 50% combined loan-to-value you can expect roughly 8% to 9%. From 50% to 65%, roughly 9% to 11%. From 65% to 75%, roughly 11% to 13%. From 75% to 80%, roughly 12% to 15%. Every point of loan-to-value you can avoid borrowing is worth real money, which is why we push back on borrowers who want to round the request up.
Institutional versus private seconds
B lenders and credit unions price roughly 1.0% to 2.0% above A rates with a lender fee around 1%, and some offer amortizing second charges in the 8% to 9% range. They will want income documentation and a credit score in the high 600s or better. Private lenders and mortgage investment corporations price on equity and property, ask far less about income, and charge for it.
What a second mortgage actually costs once you add the fees
This is the number nobody publishes, and it is the most important number on the page. On a one-year interest-only second, the lender fee, broker fee and legal costs are deducted from the advance, so you receive less than you borrow while paying interest on the full amount. That gap can add three to five percentage points to the effective cost.
Lender fees typically run 1% to 3% of the loan on private deals and up to 4% or 5% at the higher-risk end. Broker fees on private files typically run 1% to 2%. Legal fees, covering both your lawyer and the lender's, usually total $2,500 to $3,500, and an appraisal adds $300 to $500. Ask for all of it in writing before you sign a commitment.
The table below shows the same $75,000 one-year second at four different rate and fee combinations, with $2,500 of legal costs in each case. Read the last column, not the first.
Effective first-year cost of a $75,000 one-year interest-only second mortgage
Effective first-year cost of a $75,000 one-year interest-only second mortgage
Quoted rate
Lender fee
Broker fee
Total fees
Net cash you receive
Year-one cost
Effective cost on cash received
8.45%
1%
0%
$3,250
$71,750
$9,588
13.4%
10.99%
2%
1.5%
$5,125
$69,875
$13,368
19.1%
11.50%
3%
1.5%
$5,875
$69,125
$14,500
21.0%
13.50%
4%
2%
$7,000
$68,000
$17,125
25.2%
A second mortgage quoted at 11.50% can cost 21% on the cash you actually receive over a one-year term. That is still cheaper than a credit card at 22% that never gets repaid, and far cheaper than losing the property, but you should go in knowing the real figure. Any broker who will not calculate this for you is not showing you the deal.
Why the stress test pushes borrowers into second mortgages
OSFI's minimum qualifying rate requires federally regulated lenders to qualify uninsured borrowers at the greater of the contract rate plus 2% or 5.25%. At today's uninsured 5-year fixed of 4.29%, that is 6.29%. The 5.25% floor has not been the binding number for some time, and a lot of borrowers are declined for a reason they never fully understood.
Private lenders are not federally regulated and are therefore not bound by the minimum qualifying rate. That single regulatory fact is why a second mortgage exists as an option at all for a borrower who fails a refinance. It is not a loophole and it is not a trick: it is a different lender class, taking more risk, at a higher price.
The straight-switch exemption introduced in November 2024 does not help here either. It applies only to an uninsured renewal moved between federally regulated lenders with no increase in amortization and no increase in loan amount beyond $3,000 for transaction costs. Any equity takeout puts you back under the full stress test.
If you were declined on debt service ratios rather than credit, ask whether a B lender refinance clears before you go private. B pricing of roughly 1.0% to 2.0% over A rates plus a 1% fee beats a private second at 11.5% by a wide margin, and B lenders use more generous ratio treatment than A lenders do.
Second mortgage vs HELOC vs refinance: which is cheaper?
In pure rate terms the ranking almost never changes. A refinance is cheapest, a HELOC is next, an institutional second is next, and a private second is the most expensive. The reason anyone chooses further down that list is qualification, speed, or protecting a low rate on the first mortgage.
There is one case where the ranking genuinely inverts. If your existing first mortgage carries a rate well below today's, refinancing reprices your entire balance, not just the new money. Moving $340,000 from 2.94% to 4.29% costs about $4,590 a year in extra interest before you have borrowed a dollar. Against that, an amortizing second at 8.45% on $55,000 can be the cheaper total outcome, and often is.
Compare on total cost of borrowing over your real time horizon, not on headline rate
Include the penalty to break the first mortgage in any refinance comparison
Include lender and broker fees in any private comparison
If you will repay within twelve months, fees dominate the calculation, not the rate
Comparing the four routes to equity, August 2026
Comparing the four routes to equity, August 2026
Route
Typical rate
Stress test applies
Speed
Touches your first mortgage
Refinance
From 4.29% uninsured
Yes, at contract + 2%
3 to 5 weeks
Yes, whole balance repriced
HELOC
About 4.95% at prime + 0.50%
Yes
2 to 4 weeks
No, registered behind
Institutional second
About 8% to 9%
Yes
2 to 4 weeks
No
Private second
10% to 13% urban, 12% to 15% rural
No
Often under 2 weeks
No
What is a third mortgage and can you get one?
A third mortgage is a charge registered behind both a first and a second. Very few lenders will consider one, the pricing sits at the top of the private range, and the fees run higher because the lender is last in line and has the least protection.
Third mortgages are almost always distress financing: curing arrears to stop a power of sale, covering enforcement legal costs, or bridging a few months to a scheduled sale or refinance. In that context the arithmetic is not about finding cheap money, it is about whether the cost of the money is less than the cost of losing the property. Often it plainly is.
If you are being offered a third mortgage, three questions matter more than the rate. What is the combined loan-to-value across all three charges, and is there enough equity left to refinance out. What specifically happens at the end of the term. And is there a cheaper structure, such as replacing the first and second with a single new first, that achieves the same thing.
If a lender or brokerage offers a third mortgage without asking about your exit plan, walk away. On a one-year term at 14.5% with 6% in fees, the effective first-year cost can exceed 30% of the cash you receive. Money at that price is only defensible when it is buying you a specific, dated way out.
The exit plan: how to get out of a second mortgage
A second mortgage should be a bridge with a destination, not a permanent arrangement. The destination is refinancing back into a B lender, and then into an A lender, at which point the second is discharged and the total cost of borrowing falls sharply. Twelve to twenty-four months is a realistic timeline for most files.
The work in that window is unglamorous and it is what actually determines whether the exit happens. Keep every payment on every account current, because a single 30-day late resets the clock at most B lenders. Bring credit utilisation down under 30% of each limit rather than closing the accounts. If you are self-employed, get two years of T1 Generals and Notices of Assessment filed and clean, and keep CRA current.
Then diarise the refinance for sixty days before the second matures. Do not wait for the maturity letter. If the file is not ready by then, you want time to negotiate a renewal of the second rather than being forced into an expensive last-minute renewal fee.
Zero missed payments on every account for the full term
Credit utilisation below 30% per card, accounts kept open
Two years of filed tax returns and a clean CRA balance if self-employed
A dated calendar reminder at 60 days before maturity
A written target: which lender class, at what rate, at what loan-to-value
Fees, closing costs and what to ask before you sign
Second mortgage closing costs are predictable and should be disclosed in full on the commitment letter. Appraisal typically $300 to $500. Legal fees $800 to $1,500 for a straightforward institutional second, and $2,500 to $3,500 combined on a private deal where the lender's counsel is also paid by you. Title insurance $250 to $350. Lender fee 1% to 3% on private files, sometimes more.
Ontario mortgage brokerages are licensed by the Financial Services Regulatory Authority of Ontario and must display a licence number. Ask for it, and check it. In other provinces, ask which regulator licenses the brokerage and confirm the registration is current. This is a five-minute check that filters out a great deal of trouble.
Ask for the effective annual cost on the net advance, not just the interest rate
Ask what the renewal fee is if you need to extend the term
Ask whether the second is open or closed, and what prepayment costs
Ask whether the lender is a private individual, a mortgage investment corporation or an institution
Ask for the commitment letter in writing before paying any fee, and never pay an up-front fee to secure an approval
No mortgage is guaranteed. Anyone advertising guaranteed approval, no credit check or 100% approval on a second mortgage is describing something that does not exist. Approval depends on equity, property type, location, marketability and your exit plan, and it is always subject to lender approval and appraisal.
How Lendmax structures a second mortgage across 30+ lenders
The mistake most borrowers make is taking the first private offer they are shown, because it arrives quickly and they are under pressure. Second-position pricing varies enormously between lenders for the same file, and the fee structures vary more than the rates do.
We run the file across more than 30 lender programs, institutional and private, and price each one on effective cost rather than headline rate. Then we write the exit before we place the deal.
We test institutional lenders first — AI credit and ratio analysis tells us quickly whether a B lender refinance or an amortizing institutional second clears your ratios. Those are several percentage points cheaper than private money, and a surprising number of files that assume they are private actually clear at a B lender.
AVM valuation to set the combined loan-to-value — An automated valuation model gives us an early read on value so we can position the request at the lowest loan-to-value band that solves the problem. Dropping from 76% to 68% combined can move the rate by two full points before an appraiser is ever ordered.
Effective-cost comparison, not headline rates — We rebuild every offer as a single number: interest plus lender fee plus broker fee plus legal, divided by the cash actually advanced. Offers that look cheapest on rate frequently are not, and this is where the comparison is won.
A written exit plan and digital signing — Before we place the deal we write down the target lender class, the rate, the loan-to-value and the date, plus what has to be true about your credit and income by then. Documents are signed electronically and funding on private seconds is often possible inside two weeks.
This page covers: second mortgage, second mortgage rates Ontario, second mortgage Canada, third mortgage Ontario, how does a second mortgage work, private mortgage lenders Ontario, private mortgage rates Ontario, second mortgage bad credit Ontario, second mortgage vs HELOC, second mortgage vs refinance, second mortgage for debt consolidation, second mortgage no income verification, how much can I borrow on a second mortgage.
Case scenarios
Four situations, four sets of numbers
Four situations we see every week, with the numbers before and after. Names and figures are illustrative composites built from typical files — your own numbers will differ.
J
Jaspreet
Brampton, ON
Declined on ratios with 41% equity in the house
Jaspreet owns an $880,000 home with a $520,000 first mortgage at 4.34%. He had $78,000 across cards at 21.99%, a line of credit and a car loan, costing $2,240 a month. A refinance to $598,000 sat at only 68% loan-to-value, well inside the 80% limit, but his total debt service ratio failed at the stress-tested rate of 6.29%.
Before
Home value
$880,000
First mortgage
$520,000 at 4.34%
Consumer debt
$78,000
First mortgage payment
$3,050/month
Consumer debt payments
$2,240/month
Total monthly obligations
$5,290/month
After Lendmax
Home value
$880,000
First mortgage
$520,000 at 4.34%, unchanged
Second mortgage
$84,000 at 10.99% interest-only
First mortgage payment
$3,050/month
Second mortgage payment
$769/month
Total monthly obligations
$3,819/month
We placed an $84,000 one-year interest-only second with a mortgage investment corporation at 10.99%, taking combined loan-to-value to 68.6%. After a 2% lender fee, a 1.5% broker fee and $1,800 of legal costs, the net advance was $79,260, which cleared the $78,000. We disclosed the effective first-year cost of 17.6% up front, and diarised a B-lender refinance for month ten.
$1,471/month freed up, or $17,648 a year, at a disclosed first-year cost of 17.6%
M
Minh
Langley, BC
CRA arrears and a lien about to be registered
Minh runs a contracting business and had fallen $64,000 behind with CRA after two difficult years. Interest and penalties were accruing and a lien was being discussed. His home was worth $1,240,000 with a $712,000 first mortgage at 4.89%, but his last two tax returns showed written-down income no A lender would accept.
Before
Home value
$1,240,000
First mortgage
$712,000 at 4.89%
CRA arrears
$64,000, accruing interest and penalties
Combined loan-to-value
57.4%
Monthly mortgage payments
$4,016
Status
Lien under discussion
After Lendmax
Home value
$1,240,000
First mortgage
$712,000 at 4.89%, unchanged
CRA arrears
$0
Combined loan-to-value
63.2%
Monthly mortgage payments
$4,705
Status
Clear, no lien registered
We arranged a $72,000 one-year interest-only second at 11.49% with a private lender that lends on equity and property rather than tax returns. A 3% lender fee, a 1.5% broker fee and $2,200 of legal costs left a net advance of $66,560, enough to clear the $64,000 with a small buffer. Effective first-year cost was 20.6%, which we put in writing before he signed.
$64,000 of CRA arrears cleared before a lien registered, for $689 a month
C
Chantal
Edmonton, AB
Her bank wanted to break a 2.94% mortgage to lend her $55,000
Chantal needed $55,000 for urgent structural repairs and to clear a $22,000 loan. Her $520,000 home carried a $340,000 first mortgage at 2.94% on a seven-year term with two years left. Her bank's only answer was a full refinance at 4.29%, which meant repricing the entire $340,000 and paying a penalty of three months' interest.
Before
Structure proposed
Full refinance, break the 2.94% first
First mortgage
$395,000 at 4.29%, 25-year amortization
Second mortgage
None
Prepayment penalty and closing costs
$4,299
Total monthly payment
$2,140
Two-year cost of borrowing
$37,147
After Lendmax
Structure proposed
Keep the 2.94% first, add a second behind it
First mortgage
$340,000 at 2.94%, untouched
Second mortgage
$55,000 at 8.45%, 20-year amortization
Prepayment penalty and closing costs
$2,400
Total monthly payment
$2,416
Two-year cost of borrowing
$30,461
We placed an amortizing institutional second with a credit union at 8.45%, taking combined loan-to-value to 76.0%. Her payment is $276 a month higher than the refinance would have been, but she pays down considerably more principal and keeps a first-mortgage rate more than a point below market. Both mortgages roll into one A-lender first when the 2.94% term matures.
$6,686 less in two-year borrowing cost than breaking the 2.94% first mortgage
D
Dwayne
Windsor, ON
A power of sale notice and eleven days to respond
After a layoff Dwayne fell five payments behind on a $268,000 first mortgage and four behind on a $52,000 second. With property tax arrears and the lender's enforcement legal costs, $33,300 was needed to bring everything current. A power of sale notice had been served on a $465,000 home he had lived in for nineteen years.
Before
Home value
$465,000
First mortgage
$268,000 at 5.34%, five payments in arrears
Second mortgage
$52,000 at 10.99%, four payments in arrears
Arrears, taxes and enforcement costs owing
$33,300
Monthly mortgage payments
$2,341
Status
Power of sale notice served
After Lendmax
Home value
$465,000
First mortgage
$268,000 at 5.34%, current
Second mortgage
$52,000 at 10.99%, current
Arrears, taxes and enforcement costs owing
$0
Monthly mortgage payments
$2,800
Status
Enforcement stopped, 12-month exit plan in place
We placed a $38,000 one-year interest-only third mortgage at 14.5%, taking combined loan-to-value to 77.0%. A 4% lender fee, a 2% broker fee and $2,400 of legal costs left a net advance of $33,320. We told him plainly that the effective first-year cost was 30.6%, and that it was only defensible because the alternative was losing $145,000 of equity in a forced sale. The plan is to consolidate all three charges into a single B-lender first at maturity.
$33,300 of arrears cleared and the power of sale stopped, for $459 a month
Scenarios are illustrative composites for the purpose of showing how a solution is structured. They are not testimonials and do not represent specific clients. Figures assume Canadian semi-annual compounding and are rounded. Your rate, approval and savings depend on your credit, income, property and lender.
The brokerage advantage
Why a brokerage beats a single lender
Access to nationwide lenders
A single bank can only offer you the one product it sells. We are licensed across Canada and place files with dozens of lenders — chartered banks, monolines, credit unions, trust companies, alternative lenders and private capital. When one lender says no, that is the start of the conversation, not the end of it.
Specialized programs most borrowers never see
Stated-income and bank-statement programs for the self-employed, newcomer programs that accept international credit, rental-offset policies that make investment properties work, purchase-plus-improvements, extended amortizations, equity-only lending. These are real programs with real guidelines — they are simply not advertised at a branch counter.
Flexibility on how your file is structured
The same borrower can be an approval or a decline depending on which lender sees the file and how the income, debts and property are presented. We know which lender counts child support as income, which one will use a 30-year amortization, and which one will look past a bruised credit year.
Volume leverage on pricing
Lenders price for the brokerages that send them consistent, well-packaged, low-default business. That leverage is why a broker-sourced rate is frequently better than the posted rate — and why an exception request from us gets answered.
Experience with the file that is not straightforward
Power of sale timelines, tax arrears, CRA liens, separation agreements, business-for-self write-offs, construction draws, private-to-A exit plans. The complicated files are the ones where a broker earns their fee — and the ones we handle every week.
One advocate, start to finish
You are not re-explaining your situation to a new person at every stage. One licensed broker owns your file from the first call through to funding, and stays with you through renewal so the plan actually gets executed.
How it works
Our four-step process
1
Understanding the situation
We start with a real conversation, not a form. What is the payment doing to your month? What is the deadline? What has already been declined and why? Everything after this depends on getting this part right.
2
Finding a solution
Your file is matched against our full lender panel — banks, monolines, credit unions, alternative lenders and private capital — and structured to fit the guideline it will actually be approved under, the first time.
3
Negotiating rates
We do not accept the first number. Volume and lender relationships get your file priced as an exception, not as a walk-in. Then we compare the true cost — rate, penalty, prepayment terms and fees — side by side.
4
Stress-free closing
Documents are signed digitally, conditions are cleared by our team, and your lawyer is briefed before funding day. You get one point of contact from approval to keys, and a plan for what happens next.
Reviews
What clients say after closing
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Call to discuss your file
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Second & Third Mortgage — frequently asked questions
Conventionally, enough to bring your combined loan-to-value across all charges to 80% of appraised value. On a $600,000 home that is $480,000 in total, so a $380,000 first leaves about $100,000 of room. Some private lenders will go above 80%, at materially higher rates and fees. Approval also depends on property type, location and marketability, not just the arithmetic.
Ontario private second mortgages ran roughly 10% to 13% for urban properties and 12% to 15% for rural ones on May 2026 data, with about 11.5% typical for an urban second. Institutional seconds from credit unions and B lenders price lower, around 8% to 9%, but require income documentation and stronger credit. Rate rises with combined loan-to-value.
Not from private lenders. OSFI's minimum qualifying rate applies to federally regulated lenders, and private lenders and mortgage investment corporations are not federally regulated. That is precisely why a second mortgage works for a borrower whose refinance was declined at the qualifying rate of contract plus 2%. Institutional seconds from federally regulated lenders do apply it.
Private second mortgage lenders often have no fixed score cutoff, because they underwrite the equity, the property and the exit rather than the borrower's history. Institutional seconds generally want a score in the high 600s or better. A weaker score does not usually stop a private second, but it does raise the rate and the lender fee.
No. A HELOC at prime plus 0.50% costs about 4.95% today, against roughly 8% to 15% for a second mortgage. If you can qualify for a HELOC, take the HELOC. Second mortgages exist for borrowers who cannot pass the stress test, cannot document income conventionally, or need to move faster than a HELOC application allows.
Private second mortgages can often fund in under two weeks, and sometimes in a few business days on a clean file with a recent appraisal. Institutional seconds take two to four weeks. Speed is one of the genuine reasons to use private money, particularly when enforcement or a CRA lien is pending. It is not a reason to skip comparing offers.
The second lender can enforce its security, including through power of sale in Ontario, even though it ranks behind the first. In a sale the first mortgage is paid in full before the second receives anything, and enforcement legal costs are added to what you owe. If you are heading for a missed payment, contact the lender and your broker before it happens, not after.
Many private lenders will lend without full income verification because they underwrite the property and the equity. You will still need to show how the payment will be made and how the loan will be repaid at the end of the term. Approval is never guaranteed and is always subject to lender approval, appraisal and an acceptable exit plan.