Private Mortgages in Ontario

There are situations where traditional bank financing simply isn’t available — or isn’t available quickly enough. Whether you’re dealing with credit challenges, non-traditional income, a recent life event, or a time-sensitive real estate transaction, a private mortgage can provide the short-term financing needed to bridge the gap.

As a Level 2 Mortgage Agent with DLC National Ltd., I work with private lenders across Ontario to help clients in Hamilton, Burlington, Brantford, St. Catharines, Caledonia, and the Kawarthas access equity-based mortgage solutions when traditional lending isn’t an option.

What Is a Private Mortgage?

A private mortgage is a loan funded by individual investors, Mortgage Investment Corporations (MICs), or syndicated lenders rather than a bank or credit union. Approval is based primarily on the equity in your property and the overall condition and location of the real estate — not solely on income verification or credit scores.

Private mortgages are regulated in Ontario under the Financial Services Regulatory Authority of Ontario (FSRAO) and must be arranged through a licensed mortgage broker.

When Does a Private Mortgage Make Sense?

• You have bruised or damaged credit and cannot qualify with a traditional lender
• You are self-employed with income that is difficult to verify through standard documentation
• You need financing quickly for a time-sensitive purchase or closing deadline
• You are going through a divorce, separation, or estate settlement
• You are in a power of sale or need to consolidate high-interest debt urgently
• You need bridge financing between the sale of one property and the purchase of another
• Your property type or location does not meet the criteria of conventional lenders

Interest Rates and Fees

Private mortgage rates are higher than traditional mortgage rates because the lender is taking on more risk. Here is what you can generally expect in the Ontario market:

• First mortgage rates: 7% to 10%
• Second mortgage rates: 8% to 15%
• Lender fees: 1% to 3% of the loan amount
• Broker fees: 1% to 3% of the loan amount
• Legal fees: $1,500 to $3,500
• Appraisal fees: $300 to $500

Total upfront costs typically range from 2% to 5% of the loan amount in combined lender and broker fees. Rates vary based on the loan-to-value ratio, property location, and risk profile of the borrower.

Loan-to-Value (LTV) and Equity Requirements

Most private lenders in Ontario will lend up to 75% to 85% of your property’s appraised value. This means you generally need at least 15% to 25% equity in your home to qualify. Lower LTV ratios (under 50%) typically receive the most competitive rates, while higher LTV ratios carry higher interest and fees.

Properties in core urban areas like Hamilton, Burlington, and St. Catharines tend to receive more favourable terms than rural properties, which may face stricter LTV limits and higher rates.

Term Lengths and Payment Structure

Private mortgages are short-term by design. Most terms are 12 months, with a typical range of 6 to 24 months. Payments are almost always interest-only, meaning you pay only the interest each month and the full principal is due at the end of the term.

The Importance of an Exit Strategy

This is the single most important factor in any private mortgage arrangement. A private mortgage is a temporary bridge, not a long-term solution. Before approving a private loan, both I and the lender will want to see a clear and realistic exit strategy.

Common exit strategies include:

• Improving your credit score over the term to qualify for a traditional mortgage at renewal
• Selling the property
• Paying off the loan from other sources (inheritance, business income, settlement funds)

Without a viable exit strategy, you risk falling into what the industry calls the “renewal trap” — paying repeated lender and broker fees at each renewal while high interest continues to compound and erode your equity. My role is to make sure we have a clear plan before you enter a private mortgage, not after.

Who Are Private Lenders?

• Individual investors who lend personal funds secured by real estate
• Mortgage Investment Corporations (MICs) — pooled investment funds regulated under the Income Tax Act
• Syndicated lenders — groups of investors who fund a single mortgage together

Why Work With a Broker for Private Lending?

The private lending market in Ontario is large and growing. Not all private lenders are equal, and terms can vary significantly. Working with a licensed mortgage broker ensures you have access to reputable lenders, fair terms, and proper legal protections.

I work with established private lenders across Ontario and focus on structuring deals that prioritize your ability to exit successfully. If you’re in Hamilton, Burlington, Brantford, St. Catharines, Caledonia, or the Kawarthas and need short-term financing, I can help you understand your options clearly.