Private mortgage —
equity-based financing
when banks say no.

A private mortgage is a short-term loan secured against your property and funded by non-bank private capital — an individual lender, a Mortgage Investment Corporation (MIC), or a private company. The lender underwrites your home equity rather than your income or credit score, so it can fund files banks decline. It typically costs more, runs a short term, and is meant as a bridge with a planned exit.

Qualification is equity-first. The main test is loan-to-value — how much equity sits in the property after the new loan — plus the property type, your position (first or second), and a credible exit plan. Income and credit are secondary, but we still review your income and ability to make the payments, because FSRA requires us to assess whether the mortgage is suitable for you. A clear plan to refinance to a bank is effectively part of qualifying.

Rates are risk- and position-based and higher than a bank's. As an illustrative guide from our rate desk (August 2026, not today's pricing or a quote), first mortgages typically run around 7.5–10% and second mortgages around 10–13%. CMHC data show the 25 largest mortgage investment entities averaged 9.6% on single-family loans in Q3 2025, at an average 58% loan-to-value; files at higher loan-to-value usually price above that. Your actual rate depends on loan-to-value, property, position and the overall file.

Expect a lender fee of roughly 1–2% plus a broker fee of roughly 1–2% of the loan (typically 2–4% combined), plus legal fees and an appraisal. In Ontario the brokerage must disclose the cost of borrowing, fees and material risks in writing, no later than two business days before you commit, so nothing is buried in the rate or sprung at closing.

Faster than a bank. On a clean file a lender can issue a commitment in as little as 24–48 hours, and funding typically follows in 7–14 days once the appraisal, legal work and conditions are complete. Truly urgent files can move quicker; complex files can take up to 3 weeks.

A first mortgage sits in first position on title, so it carries the least risk and the lowest private rate, typically up to about 75% loan-to-value. A second mortgage sits behind your existing first, carries more risk and a higher rate, and is used to draw equity without breaking a low first-mortgage rate — usually to a combined loan-to-value around 80–85%.

A bank underwrites your income, credit and debt ratios and offers the lowest rate but the strictest rules. A private mortgage underwrites your equity, funds fast and flexibly on files a bank declines, but costs more and runs short-term. Private is a bridge, not a destination — the goal is to refinance back to a bank as soon as the file qualifies.

A B-lender is a regulated alternative lender that still checks income and credit but is more flexible than a bank, at a modest rate premium. A private lender goes further — equity-based, faster, and open to files a B-lender won't touch — at a higher cost. Many borrowers step from private to B to A over time as the file improves.

Far fewer than a bank. Typically: government ID, a current mortgage statement and property details, a recent appraisal (or we order one), proof the property taxes are current, and a note on your exit plan. Private lenders focus on equity, but we still review your income and ability to make the payments because FSRA requires us to assess suitability.

There's no single legal minimum, but you generally need meaningful equity left after the loan. As a rough guide, first mortgages go up to about 75% loan-to-value and combined first-plus-second financing to about 80–85%, depending on the property, location and lender. Lower loan-to-value gets you better pricing and more lender choice.

It depends on the lender. Some private lenders and MICs report to the credit bureaus — so on-time payments can help — others don't report at all. Applying doesn't require the multiple hard credit pulls a bank shop can. We tell you each lender's reporting practice before you choose.

Yes, private mortgages are legal. In Ontario, the brokerage and agents who arrange one are licensed by FSRA under the Mortgage Brokerages, Lenders and Administrators Act, 2006 — Mortgage Squad Advisors is FSRA brokerage #13737 — and must give you written disclosure of the cost of borrowing, fees, material risks and any conflicts of interest before you commit. The private lenders themselves are not banks and are described by CMHC as unregulated lenders in the uninsured space.

That's the risk the exit plan exists to prevent. If you reach maturity without a refinance, options are: negotiate a renewal (not guaranteed), refinance with another lender, or sell. If the loan goes into default the lender can begin enforcement — in Ontario usually power of sale under the Mortgages Act. This is exactly why we set a concrete, funded exit on day one and track it every quarter, rather than leaving it to chance.