Private Mortgage
Private Residential Mortgage Solutions
When banks cannot help, private lenders can. Equity-based approvals, fast funding, and flexible terms designed for borrowers who need a real solution now.
Private Mortgage at a Glance
When Private Makes Sense
Situations Where Private Lending Works Best
Private mortgages are not for everyone, but for borrowers in these situations, they provide a practical path forward that institutional lenders cannot offer.
You Need Speed
Private mortgages can fund in as little as 3 to 7 business days. When you are facing a tight closing deadline or need to act on a time-sensitive opportunity, private lending removes the delays inherent in institutional approvals.
Credit Challenges
Bankruptcy, consumer proposal, collections, or a low beacon score will not disqualify you from a private mortgage. Approval is based on the equity in your property, not your credit history or employment status.
Non-Traditional Income
Self-employed borrowers, commission earners, gig workers, and those with income that is difficult to document on paper can qualify with a private lender. No T4s, NOAs, or tax returns are required for most private mortgage applications.
Bridge Between Properties
Selling one home and buying another often creates a timing gap. A private mortgage bridges that gap, giving you the funds to close on your new property before your existing home sells.
Debt Consolidation
If high-interest consumer debt is dragging down your cash flow and credit score, a private mortgage against your home equity can consolidate everything into a single, lower monthly payment.
Bank Declined Your Application
When banks and B-lenders say no, private lenders offer a viable alternative. Whether the issue is property type, income verification, or credit history, private lending fills the gap that institutional lenders leave open.
What to Expect
Typical Private Mortgage Terms
Interest Rates
7% to 12% annuallyRates vary based on loan-to-value ratio, property location, and borrower profile. Urban properties in the GTA and other major cities typically receive the most competitive rates.
Term Length
12 to 24 monthsPrivate mortgages are designed as short-term solutions. Most terms are 1 year with an option to renew for a second year. The goal is always to transition to institutional financing before the term expires.
Payment Structure
Interest-only monthly paymentsYou pay only the interest each month with no principal reduction. This keeps your monthly obligation lower than a fully amortized mortgage. The full principal balance is due at the end of the term.
Lender Fee
1% to 2% of loan amountA one-time fee charged by the private lender at closing. This fee is typically deducted from the mortgage advance. On a $400,000 mortgage, expect a lender fee of $4,000 to $8,000.
Legal Costs
$1,500 to $3,000Both the borrower and the lender require independent legal representation. Borrowers are responsible for their own legal fees plus the lender legal costs, which are typically deducted from the advance.
Loan-to-Value Limits
How Much Equity Do You Need?
| Property Location | Maximum LTV | Minimum Equity Required | Example ($500K Property) |
|---|---|---|---|
| GTA / Vancouver / Calgary | Up to 80% | 20% minimum | Max loan: $400,000 |
| Secondary Cities | Up to 75% | 25% minimum | Max loan: $375,000 |
| Small Towns / Rural | Up to 65% - 70% | 30% - 35% minimum | Max loan: $325,000 - $350,000 |
Planning Ahead
Your Exit Strategy Matters
Every private mortgage should have a clear plan for how you will pay it off or transition to lower-cost financing. We help you build that plan before you sign.
Refinance with a B-lender or A-lender once credit has improved
Sell the property and pay off the private mortgage from sale proceeds
Renew the private mortgage for a second term if more time is needed
Qualify for institutional financing after income stabilizes
Pay off the mortgage with proceeds from another asset sale or business income
Licensed and Regulated
In Ontario, the Financial Services Regulatory Authority of Ontario (FSRA) requires that all private mortgage transactions involving a borrower be arranged through a licensed mortgage brokerage. This ensures full disclosure of terms, fees, and costs, and provides borrowers with regulatory protection. The Mortgage World operates under FSCO licence #12978 and adheres to all provincial lending regulations. Similar licensing requirements apply in Alberta (RECA) and Manitoba (MFDA).
Working with a licensed broker gives you access to a vetted network of private lenders, professional advice on structuring your mortgage, and the assurance that your transaction meets all regulatory requirements. For more on our residential private mortgage programs, visit our dedicated site at theprivatemortgages.ca.
Common Questions
Private Mortgage FAQ
A private mortgage is a loan secured against real estate that is funded by an individual investor or a Mortgage Investment Corporation (MIC) rather than a bank or credit union. The approval process focuses on the equity in your property rather than your credit score or income documentation. Private mortgages carry higher interest rates than institutional loans but offer significantly faster approvals and more flexible qualification criteria. They are designed as short-term solutions, typically 1 to 2 years, with the expectation that you will transition to a lower-cost institutional mortgage once your circumstances improve.
In Ontario, the Financial Services Regulatory Authority (FSRA) requires that all private mortgage transactions involving a borrower go through a licensed mortgage broker or agent. This regulation exists to protect borrowers by ensuring proper disclosure, fair terms, and professional oversight. Our brokerage (FSCO #12978) is fully licensed and specializes in arranging private mortgages. We ensure all legal requirements are met and negotiate the best possible terms with our network of private lenders.
Private lenders base the maximum loan amount on the appraised value of your property. In major urban centres like Toronto, Ottawa, Calgary, and Winnipeg, most private lenders will advance up to 75% to 80% of the property value. In smaller cities and rural areas, the maximum is typically 65% to 70%. If you have an existing first mortgage, the private mortgage amount is limited to the difference between your current mortgage balance and the maximum LTV the lender will accept.
Most private mortgages can be approved within 24 to 48 hours once we have a completed application and property details. Funding typically occurs within 3 to 7 business days after approval, depending on how quickly the appraisal and legal work can be completed. In urgent situations, some private lenders can fund in as little as 2 to 3 business days. This is dramatically faster than the 3 to 6 week timeline common with institutional lenders.
You have several options when your term ends. The ideal outcome is to refinance with a B-lender or A-lender at a lower interest rate, which is possible if your credit has improved during the term. You can also renew with the same private lender for another term, sell the property to pay off the mortgage, or arrange a new private mortgage with different terms. We work with you from day one to plan your exit strategy so there are no surprises at maturity.
Yes, private mortgages are a well-established and fully regulated segment of the Canadian mortgage market. In Ontario, all private mortgage transactions must be facilitated by FSRA-licensed brokerages. Borrowers receive full disclosure of all terms, fees, and costs before signing. The mortgage is registered on title just like a bank mortgage, and all standard legal protections apply. We only work with reputable private lenders who have a track record of fair dealing with borrowers.
Need a Private Mortgage Solution?
We arrange private residential mortgages across Ontario, Alberta, and Manitoba. Tell us about your situation and we will present your best options within 24 hours.