How to Get a Private Mortgage in Ontario

Private mortgages remain a significant part of Ontario’s lending market. The Financial Services Regulatory Authority of Ontario (FSRA) tracks private residential lending arranged through licensed brokerages and reported in 2025 that it remains significant, with many of those borrowers facing affordability challenges. For borrowers who don’t meet a bank’s qualifying rules, a private lender can be the bridge to a home purchase, refinance or debt consolidation.

Private mortgages are typically short-term solutions, often used by those with bad credit, non-traditional income sources, or unique property types. This blog post will guide you through the process of obtaining a private mortgage in Ontario, highlighting the key steps, benefits, and potential challenges.

Understanding Private Mortgages

A private mortgage is a loan provided by private lenders, which can be individuals, mortgage investment corporations (MICs), or syndicates. Unlike traditional lenders, private lenders focus more on the value and equity of the property rather than the borrower’s credit history or income. This flexibility makes private mortgages an attractive option for those who do not meet the stringent criteria of conventional lenders.

Key Steps to Obtain a Private Mortgage in Ontario

1. Assess Your Financial Situation

Before seeking a private mortgage, it is crucial to evaluate your financial situation. Determine your credit score, income sources, and your property’s equity. Private lenders are more lenient with credit scores and income verification but may require substantial equity in the property.

2. Find a Licensed Mortgage Broker

In Ontario, private lenders often work through licensed mortgage brokers. These brokers have access to a network of private lenders and can help you find the best terms and rates. Ensure the broker is licensed by the Financial Services Regulatory Authority of Ontario (FSRA) (you can check a licence on FSRA’s public registry). A licensed brokerage must disclose its fees and any lender fees to you in writing before you sign.

3. Prepare Necessary Documentation

While private lenders are less stringent than traditional banks, they still require certain documentation to assess the loan. Common documents include:

• Proof of income (e.g., pay stubs, tax returns)

• Property appraisal report

• Mortgage application form

• Identification documents

Having these documents ready can expedite the approval process.

4. Property Appraisal

A key factor for private lenders is the value of the property. An independent appraisal will be required to determine the current market value. This appraisal helps the lender assess the loan-to-value (LTV) ratio, which is crucial for determining the loan amount and interest rate. Typically, private lenders prefer a lower LTV ratio to minimize their risk.

5. Negotiate Terms and Conditions

Private mortgages often come with higher interest rates and shorter terms compared to traditional mortgages. Negotiating the terms and conditions, including the interest rate, repayment schedule, and any additional fees, is essential. Ensure that you understand all the terms before signing the agreement to avoid any surprises later on.

Benefits of Private Mortgages

• Flexibility: Private lenders offer more flexible terms and are willing to work with borrowers with poor credit or non-traditional income sources.

• Quick Approval: The approval process for private mortgages is generally faster than traditional mortgages, sometimes within days through licensed mortgage brokers, once the appraisal and legal work are complete.

• Short-Term Solution: Private mortgages are best suited to short-term needs, such as bridging loans, debt consolidation, or financing unconventional properties.

What does a private mortgage cost?

Expect a higher interest rate than a bank or B-lender mortgage, plus lender and brokerage fees that are often deducted from the funds advanced. Payments are frequently interest-only and terms are usually short (often one or two years), so you need an exit plan, such as refinancing with a B-lender or bank once your credit or income improves, or selling. FSRA’s consumer guide to private and alternative mortgages explains the costs and risks.

Obtaining a private mortgage in Ontario can be a viable solution for those who cannot secure traditional financing. By understanding the process and working with a licensed mortgage broker, you can navigate the complexities of private lending and find a mortgage that suits your needs. Always ensure that you have a clear repayment plan and seek legal advice to protect your interests. 

About Mortgage Squad Advisors

Mortgage Squad Advisors is a team of experienced mortgage brokers who specialize in private mortgages in Ontario. We have strong relationships with various private lenders and can help you find the best private mortgage options for your specific needs. Our goal is to make obtaining a private mortgage as smooth and efficient as possible for our clients. For further details or to discuss your requirements, feel free to get in touch with us today!