Private mortgages in Ontario help borrowers when banks say no. If you’ve been turned down for a mortgage, are self-employed with hard-to-document income, or need to close in days, a private mortgage could be the solution. As a licensed Ontario mortgage broker regulated by the Financial Services Regulatory Authority of Ontario (FSRA licence #13380), I work with reputable private lenders to help homeowners and buyers secure financing when traditional lenders say no.
Last updated: September 2026
What Is a Private Mortgage?
A private mortgage is a home loan funded by a private lender — an individual investor or private lending company — rather than a bank, credit union, or monoline lender. Private lenders base their decisions primarily on the equity in your property and a clear exit strategy, instead of strict income verification and credit score cutoffs. Private mortgages in Ontario are commonly used as short-term solutions, typically with 1- to 2-year terms, giving borrowers time to improve their credit, stabilize their income, or sell or refinance the property.
Who Uses Private Mortgages in Ontario?
Private mortgages are a practical option for many Ontario borrowers, including: borrowers declined by banks; self-employed borrowers whose taxable income doesn’t reflect real earnings; borrowers with bruised credit (past bankruptcies, consumer proposals, or missed payments don’t automatically disqualify you); urgent closings (approvals can often be completed in days, not weeks); investors financing rental properties; and homeowners using equity for debt consolidation.
Private Mortgage Rates and Fees in Ontario
Rates updated October 2026 — typical rates across my Ontario private-lender network. Your exact rate depends on loan-to-value, property type, and term.
| Type | Typical rate | Typical lender fee |
|---|---|---|
| 1st Private Mortgage | 7%–12% | 1–2% of loan amount |
| 2nd Private Mortgage | 10%–14% | 2–3% of loan amount |
On top of interest, budget for an appraisal ($300–$500), legal fees, and a broker fee. Every cost is disclosed in writing before you commit — no surprises.
Ranges reflect typical advertised private-lender pricing in Ontario as of September 2026. Actual rates vary by file.
Private mortgage rates in Ontario are higher than bank rates — that’s the trade-off for flexible qualification and speed. Your exact rate depends on the loan-to-value ratio, the property, and the term. Beyond the interest rate, a private mortgage typically involves a lender fee (usually a percentage of the loan amount), a broker fee, legal fees (a real estate lawyer must register the mortgage), and an appraisal fee. Before you commit, every cost is laid out in writing so you know exactly what you’re paying.
What Does a Private Mortgage Actually Cost? (Worked Example)
Take a $300,000 second mortgage at 10.99%, interest-only: $300,000 × 10.99% ÷ 12 = $2,747.50 per month. A 3% lender fee adds $9,000 at closing, plus roughly $400 for the appraisal and legal fees of about $1,800. Total cash needed at closing beyond the loan itself: around $11,200 — every dollar of it disclosed up front.
First vs. Second Private Mortgages
A first private mortgage replaces your primary home loan — useful when you need to refinance but can’t qualify conventionally. A second private mortgage sits behind your existing first mortgage and lets you access equity without disturbing a good rate you already have. Second mortgages are one of the most common uses of private lending in Ontario.
Banks vs. Private Lenders at a Glance
| Bank / A-Lender | Private Lender | |
|---|---|---|
| Approval based on | Income, credit score, debt ratios | Home equity + exit strategy |
| Typical timeline | 2–6 weeks | Days |
| Interest rates | Lower | Higher |
| Terms | 1–10 years | Usually 1–2 years |
| Best for | Strong credit and provable income | Bruised credit, self-employed, urgent closings |
How to Qualify for a Private Mortgage in Ontario
Private lenders focus on three things: (1) Equity — most lend up to 75–80% of the property’s appraised value. (2) Exit strategy — a realistic plan for how the mortgage gets repaid or refinanced at term end. (3) Property — most residential properties in Ontario qualify. Credit score and income matter, but aren’t the deciding factors the way they are with a bank.
How the Process Works
- Free consultation — discuss your situation, property, and goals.
- Application — provide basic property and financial details.
- Lender matching — your file is shopped across a network of private lenders, with best terms presented, often within 24–48 hours.
- Approval and closing — a real estate lawyer registers the mortgage and funds are released.
Your Exit Strategy Matters
Private mortgages are short-term tools, usually 1–2 years. Before you borrow, we map your exit: refinancing into a bank mortgage once your credit or income documentation improves, selling the property, or renewing if more time is needed. A private mortgage without a realistic exit plan is a trap — with one, it’s a bridge.
Private Mortgage FAQs
What credit score do I need for a private mortgage in Ontario?
There is no strict minimum; lenders weigh equity and exit strategy far more heavily than credit score.
How fast can a private mortgage close in Ontario?
Often within a few days of approval, once appraisal and legal work are complete.
How much can I borrow with a private mortgage?
Most lenders go up to 75–80% of appraised value.
Are private mortgages only for people with bad credit?
No; many borrowers use them for speed, flexible terms, or investment properties banks won’t finance.
What fees are involved?
Typically a lender fee, broker fee, legal fees, and appraisal fee, all disclosed in writing before signing.
Can I get a private mortgage as a second mortgage?
Yes; very common in Ontario.
How long are private mortgage terms?
Most are 1 to 2 years, designed as bridge financing.
Is a private mortgage safe?
Yes when arranged properly; mortgages are registered on title by a real estate lawyer, and the broker is licensed and regulated by FSRA, Ontario’s financial services regulator.
Is it easy to get a private mortgage in Ontario?
Easier than a bank mortgage — private lenders focus on your property’s equity rather than your credit score or income, and there’s no stress test. Most lenders want to see at least 20–25% equity in the property, and approvals can come within 24 to 48 hours. The trade-off is higher rates and lender fees, and terms are short (usually one to two years), so you need an exit plan — like refinancing with a bank once your situation improves.
What are the current private mortgage rates in Ontario?
Private mortgage rates in Ontario typically run from about 8% to 15%, depending on the property, how much equity you have, and whether it’s a first or second mortgage. That’s higher than bank rates because the lender is taking on more risk. On top of the rate, expect a lender fee (often 1–3% of the loan amount) plus broker and legal fees. Because every file is priced on its own risk, the fastest way to know your number is to have a broker review your property and equity.
How do private mortgages work?
A private mortgage is a home loan funded by an individual or private company instead of a bank. The loan is secured against your property — usually as a first or second mortgage — and because private lenders aren’t federally regulated, they can approve files banks turn down: bruised credit, self-employment income, or urgent timelines. Terms are short, typically 6 months to 3 years, interest-only payments are common, and at the end of the term you sell, renew, or refinance into a traditional mortgage.
What are the risks of private lending?
The main risks are cost and time. Rates and fees are higher than a bank’s, and because terms are short you must have a realistic exit strategy — if you can’t refinance or sell when the term ends, renewing gets expensive. The other risk is borrowing more than your exit plan supports. A licensed broker structures the deal around a clear path back to traditional financing, so the private mortgage works as a bridge, not a trap.
Is it better to go with a private lender or a bank?
If you qualify at a bank, the bank is almost always cheaper. A private lender makes sense when the bank says no — bruised credit, self-employment income that’s hard to document, a purchase closing too fast for bank timelines, or a property banks won’t touch. Many borrowers use a private mortgage as a bridge: get the deal done now, improve the situation, then refinance with a bank at lower rates in a year or two.
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(416) 716-9696Kia Pakravan, Mortgage Broker · FSRA Licence #13380 · 12930 Yonge Street, Richmond Hill, ON L4E 0T7
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- Licensed Ontario mortgage broker (FSRA licence #13380),
- A network of reputable private lenders across Ontario
- 12930 Yonge Street, Richmond Hill, ON L4E 0T7
- (416) 716-9696 · info@kia.mortgage
Get a Free Private Mortgage Consultation
Every situation is different, and a short conversation is often all it takes to find out your options. Book your free private mortgage consultation today.
Looking specifically in the city? See my guide to private mortgages in Toronto.