Serving Simcoe County · Muskoka · Ontario
A guide to private lending in Ontario
If a bank has said no and you have equity in your home, private lending is often the next thing people hear about, usually without much of an explanation. This guide walks through what a private mortgage actually is, who it is for, what it costs, what you need to apply, and how to use it the right way: as a short bridge with a clear plan to get back to a regular mortgage. I have arranged private financing across Ontario for more than 25 years, and my rule is simple. A private mortgage should solve a problem, not create one.
What is a private mortgage?
A private mortgage is a loan secured against your property from a private lender, rather than a bank or credit union. The lender might be an individual investor, a group of investors, or a mortgage investment corporation. Instead of leaning mostly on your credit score and strict income rules, a private lender looks at the equity in your property and your overall story, including how you plan to repay. That is why private lending can move quickly and handle situations a bank cannot. In exchange, the rate and fees are higher and the term is short.
How is it different from a bank mortgage?
Banks are federally regulated and follow rigid rules, including the stress test and set debt ratios. A private lender is not bound by all of those rules, so there is more room to consider the full picture. The trade-offs are real: you pay more, the term is shorter, and the payments are often interest-only, which means the balance does not shrink on its own. The point of a private mortgage is not to keep it for years. It is to get you through a specific situation.
Who uses private lending?
Private lending tends to help people in a transition that a bank is not set up to handle, including:
Do you need specific documentation?
You need less paperwork than a bank asks for, but not nothing. The property and its equity carry most of the weight, so the list is shorter and more about the property than your pay stubs. In most cases, be ready with:
- Photo identification
- A recent mortgage statement for the property
- A current property tax bill
- A sense of the property value, such as a recent appraisal or, for a purchase, the agreement of sale
- A basic picture of your income or how you will make the payments
- Documents about any specific issue you are solving, such as a CRA notice, a consumer proposal, or a separation agreement
If something is missing, that is fine. Part of my job is to tell you exactly what a given lender will want before we submit, so there are no surprises.
What does a private mortgage cost in Ontario?
A private mortgage costs more than a bank mortgage, because the lender is taking on more risk. The rate and fee depend on the property, the location, how much equity there is, and whether it sits in first or second position. Here is the general shape of it for 2026. Treat these as typical ranges, not a quote.
| WHAT | General 2026 guide (varies by deal) |
|---|---|
| Interest rate | Higher than a bank mortgage; priced to the risk and the amount of equity |
| Lender / broker fee | A one-time fee, usually a few percent of the loan amount |
| How much you can borrow | Usually up to about 75 to 80% of the property value, including any existing mortgage |
| Term | Short, usually 6 months to 2 years |
| Payments | Often interest-only |
The more equity you have and the lower the risk, the better the pricing. This is also why an exit strategy matters so much: the goal is to carry these higher costs only for a short time.
Types of private mortgages
Private lending is not one product. Depending on your situation, it might be:
- A first mortgage, where the private loan is the only mortgage on the property
- A second mortgage, which sits behind your existing mortgage and lets you tap equity without touching a good first-mortgage rate
- An equity take-out, to free up cash based on how much equity you hold
- Bridge financing, to cover a short gap between buying and selling
- A short-term mortgage to fund a renovation or get a property ready to sell or refinance
The exit strategy: the most important part
This is the piece most people are never told about, and it is the piece that matters most. An exit strategy is the plan for how you get out of the private mortgage, before or at the end of the term. Usually that means refinancing with a bank once your situation has improved, for example once your credit is rebuilt, your income is provable, or your tax arrears are cleared. Sometimes it means selling the property. Either way, the plan is set at the very start, not figured out later. Every private mortgage I arrange includes a clear exit, and a plan to transition back to conventional financing whenever possible. Without one, a short-term fix can turn into an expensive mortgage you keep renewing.
What to do: the steps from here
If you think private lending might be the answer, here is how it usually goes:
STEP 1
Talk to a licensed mortgage broker about your situation and your goal. This is where you confirm whether private is even the right fit, or whether another option is better.
STEP 2
Review your equity and the numbers, so you understand the likely cost and the exit before committing to anything.
STEP 3
Match with a suitable lender and submit a complete package, including the property details and your exit plan.
STEP 4
Lender review and appraisal, so the lender can confirm the property value and the deal.
STEP 5
Commitment and lawyer review, where a real estate lawyer makes sure you understand the terms before you sign.
STEP 6
Funding, and then you work the exit plan so you can move back to a conventional mortgage on schedule.
What to watch for
Private lending is a sensible short-term tool when it is used with a plan and the right advice. Go in with your eyes open on three things: the full cost, including the rate and the one-time fee; the fact that a private lender can act more quickly than a bank if payments are missed; and the importance of a realistic exit. Always have a mortgage broker and a real estate lawyer involved before you sign anything. The right guidance is what keeps a private mortgage a helpful bridge rather than a trap.
How I help
I am not a private lender. I am a licensed mortgage broker, which means I work for you, not the lender. I will tell you honestly whether private lending fits your situation, and if it does not, I will say so. If it does, I compare options, keep the cost and terms in check, build the exit plan with you from day one, and coordinate the lawyers and paperwork so the process is as smooth as possible. And when the time comes to move back to a bank, I help you do that too.
Wondering if private lending is the right move,
or just want to understand your options?
Let's talk it through.
Call or text 705-325-7283, or send me your question and I will get back to you.
The first conversation is free and there is no obligation.
Every situation is different. Rates, fees, and approval depend on the property, your equity, your credit, and the overall financial picture. The figures above are general market ranges for information only, not an offer or a quote. Mortgage brokering in Ontario is regulated by the Financial Services Regulatory Authority of Ontario (FSRA).
Common questions
What is a private mortgage?
A private mortgage is a loan secured against your property from a private lender, such as an individual investor, a group of investors, or a mortgage investment corporation, rather than a bank or credit union. Private lenders look more at the equity in the property and your overall story than at a credit score and strict income rules, so they can move faster and be more flexible. In return, the rate and fees are higher and the term is short.
Who uses private lending?
People who do not fit a bank's rules right now. That often means the self-employed, newcomers, someone with bruised credit or in a consumer proposal, people who owe the CRA, those going through a separation, buyers of unusual or rural properties, or anyone who needs financing quickly. It is usually a short-term bridge, not a long-term mortgage.
What documents do I need for a private mortgage?
Less than a bank asks for, but you still need the basics: proof of who you are, a recent mortgage statement and property tax bill, a sense of the property value such as a recent appraisal or purchase agreement, and an idea of your income or how you will make the payments. If there is a specific issue, such as CRA arrears or a consumer proposal, documents about that help too. The property and its equity matter more here than a stack of income paperwork.
How much does a private mortgage cost in Ontario?
It costs more than a bank mortgage, because the lender is taking on more risk. As a general guide for 2026, rates are often higher than conventional rates, and there is usually a one-time lender or broker fee of a few percent of the loan. The exact rate and fee depend on the property, the location, how much equity there is, and whether it is a first or second mortgage. Every situation is priced on its own.
How much can I borrow against my home with a private mortgage?
Most private lenders will lend up to roughly 75 to 80 percent of the property value, counting any existing mortgage. So the more equity you have, the more room there is. Lower-risk deals with more equity also get better pricing.
How long does a private mortgage last?
They are short-term, usually six months to two years, and the payments are often interest-only. The idea is not to keep a private mortgage for long. It is a bridge to get you through a situation and back to a conventional lender.
What is an exit strategy and why does it matter?
An exit strategy is the plan for how you get out of the private mortgage before or at the end of the term, usually by refinancing with a bank once your situation has improved, or by selling the property. A private mortgage should solve a problem, not create one, so a clear exit plan is set at the start. Without one, you can end up stuck renewing at a high rate.
Is private lending safe?
It can be a sensible short-term tool when it is used with a clear plan and the right advice. The risks are the higher cost and the fact that a private lender can move to enforce more quickly than a bank if payments are missed. That is why it matters to understand the full cost, have an exit strategy, and use a mortgage broker and a real estate lawyer before signing.
How do I get a private mortgage in Ontario?
Start by talking to a licensed mortgage broker, who can look at your situation, confirm whether private is the right fit, and match you with a suitable lender. From there it moves to a lender review of the property and your plan, an appraisal, a commitment, lawyer review, and funding. Having a broker coordinate it keeps the cost and the terms in check.
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