What is a private mortgage in Canada?
A private mortgage is a loan secured against your home by a private lender — an individual, investor group, or MIC — approved on your equity, not your credit score. It funds fast and works when banks can’t. Here’s how it works, what it costs, and when to use one.
Priced above bank rates for speed and flexibility — built as a short bridge with a mapped exit.
See if a private mortgage fitsHow a private mortgage works
The lender values the property and confirms there's enough equity — you usually keep 25–35% — to secure the loan.
Approval hinges on the property, not a credit score, so it moves quickly — funding typically in ~7–14 days once the appraisal and legal work are done; complex files can take up to 3 weeks.
You hold the private mortgage for 6–24 months, typically interest-only, while you fix what kept you from a bank.
Refinance out to a bank or B-lender once your file qualifies — the plan we map before you ever sign.
Because approval rests on the property’s equity rather than your score or income, a private mortgage can fund files banks decline — but the trade-off is a higher rate plus lender/broker fees. That’s why it’s built as a short bridge with a planned exit, not a long-term mortgage.
When a private mortgage is the right tool
Use it for speed or when the banks can’t help: bruised credit, self-employed or hard-to-prove income, a tight closing deadline, stopping a power of sale, clearing CRA or property-tax arrears, or bridging between two homes. Explore the related paths below — we’ll tell you honestly if a bank or B-lender is the better fit.
What a private mortgage costs, and how the numbers work
A private mortgage is priced for risk and speed, so it costs more than a bank loan in two ways. First, the interest rate — typically several points above prime, and often structured as interest-only so the monthly payment stays manageable while the balance holds steady1. For a published benchmark, CMHC reported that the 25 largest private lenders averaged about 9.6% on single-family mortgages at roughly 58% loan-to-value in Q3 20252. Second, the fees — a lender fee and a broker fee, each usually a percentage of the loan, disclosed up front. On a short term those costs buy you a solution the banks couldn’t provide; over 25 years they’d be expensive, which is exactly why a private mortgage is never meant to run that long.
The deciding number is equity. Private lenders think in loan-to-value (LTV): they add your new loan to any existing mortgage and want the total to stay within a comfortable band of the property’s value — typically up to about 65–75% on a first mortgage, meaning you keep 25–35% as a cushion; higher combined LTV is possible only with a second. A first-position private mortgage replaces your existing loan; a second mortgage sits behind it, so you don’t disturb a good first-mortgage rate and you only borrow against the equity above your current balance.
Terms usually run 6 to 24 months. That window exists for one reason: the exit. You use the time to fix whatever kept you from a bank — rebuild credit, document self-employed income, finish a renovation, or complete a sale — and then refinance to a B- or A-lender at a lower rate. A responsible broker maps that exit before you sign, so the private mortgage is a planned bridge with a known off-ramp, not an open-ended high-rate loan.
Done right, the math works because the private mortgage unlocks something — a purchase you’d otherwise lose, equity you can’t otherwise reach, or time to avoid a forced sale. The cost of the bridge is weighed against the cost of doing nothing, and that’s the honest conversation we’ll have before you commit a dollar.
6 things to know about private mortgages
What makes private lending different — and how to use it without overpaying.
It's equity-based, not score-based
A private lender's first question is how much equity is in the property, not what your credit score is. If there's enough equity (usually you keep 25–35%), the deal can work even with bruised credit, no score, or hard-to-prove income.
It's meant to be short-term
Private mortgages are bridges, typically 6–24 months, interest-only. The plan is always the exit: repair credit or verify income, then refinance to a bank or B-lender at a lower rate. A good broker maps that exit before you sign.
You pay for speed and flexibility
Rates run above bank pricing and there are lender/broker fees, because private capital takes on more risk and funds fast. It's the cost of a solution when the banks say no or can't move in time — not a forever rate.
Funding is fast
Where a bank can take weeks, a private mortgage typically funds in ~7–14 days once the appraisal and legal work are done; complex files can take up to 3 weeks. That speed is why they're used for closing deadlines, power-of-sale rescues, tax arrears, and bridging between properties.
First, second, or even third position
A private lender can sit behind your existing mortgage (a second mortgage) so you don't disturb a good first-mortgage rate, or take first position outright. The position affects the rate and how much you can access.
The right broker protects you
Private lending is where structure matters most — fees, term, exit, and lender quality vary widely. An FSRA-licensed brokerage discloses every cost up front and only places you with reputable lenders on terms you can actually exit.
Why arrange a private mortgage with us
- Equity-based approvals when banks and B-lenders can't — funding typically in ~7–14 days once the appraisal and legal work are done.
- Every cost disclosed up front — rate, lender fee, broker fee, term, and the exit — before you commit.
- A mapped exit to lower pricing built into every private placement, not an open-ended high rate.
- FSRA #13737 · vetted private & MIC lenders only · a broker on your side, not the lender's.
Private mortgages — FAQ
What is a private mortgage?
How do private mortgages work in Canada?
What are private mortgage rates and fees?
When does a private mortgage make sense?
Is a private mortgage the same as a second mortgage?
How do I get out of a private mortgage?
Sources
Primary sources for the rules and figures above. Rules, rates and lender policies change, so confirm anything you plan to act on with a licensed advisor.
- 1. FSRA, Private mortgages: what consumers should know: FSRA consumer guidance on the risks, costs and disclosure for private mortgages in Ontario.
- 2. CMHC, Residential Mortgage Industry Report: CMHC data on mortgage lenders and arrears; the top 25 mortgage investment entities (private lenders) averaged a 9.6% single-family lending rate at ~58% LTV in Q3 2025.
Need equity fast, or the banks said no?
We’ll tell you honestly whether a private mortgage fits — and if it does, arrange it on transparent terms with a mapped exit. Every cost disclosed up front.