Private Mortgage

When to use a private lender — and when to keep looking.

A private lender is the right call in a handful of specific situations: declined by the bank, an urgent closing, bridge financing, bruised credit, complex self-employed income, or tax arrears. Used well, it’s a short-term bridge with a planned exit back to an A-lender — not a permanent home.

Declined by the bankUrgent / firm closingBridge financingBruised creditSelf-employed incomeCRA tax arrears

Start your pre-approval — 5 min Chat with Maya 4.9256 Google reviews

No credit pull to begin

Written by the Mortgage Squad Advisors Editorial Team · Reviewed by Surrayya Afzal, Principal Broker, FSRA #M14001433 · Updated July 2026

Bank said no? Need cash fast?

Private funding, often in days.

A short-term mortgage based on your home's equity, not your credit score. Every fee disclosed in writing before you sign.

Typical funding window

7–14days

faster when title, appraisal and legal are clean; not guaranteed

Max LTV

75-85%

Term

6-24 mo

Exit

A-lender

We use private as a bridge — never the destination. Exit plan to A or B-lender is on every file.

Get pre-approved Equity check

Maya · AI · 24/7

When does a private mortgage make sense?

FSRA #13737| 15+ languages

100+ lenderscompared on one application

FSRA #13737licensed Ontario brokerage

15+ languagesspoken by our advisors

No credit pullto start your pre-approval

Most people don’t go looking for a private lender — they land there after a bank says no, a deal is about to collapse over timing, or their income doesn’t fit a rigid A-lender box. The instinct is either to panic or to assume a private mortgage is a bad idea by default. Neither is right. A private lender is a specialized tool: in the wrong situation it’s expensive and unnecessary, but in the right one it’s the difference between saving a purchase and losing your deposit, or between bridging a rough 12 months and a forced sale. The whole game is knowing which situation you’re actually in — and having a written plan to get back out.

A couple reviewing mortgage options with an advisor in their living room

On this page

When should you actually use a private lender?
Declined by the bank, urgent closings, and bridge financing
Bruised credit, self-employed income, and tax arrears
The exit plan: why private should be short-term
How we decide with you — and the guardrails
FAQ

When should you actually use a private lender?

A private lender is not a fallback you settle for — it’s a specific tool for specific situations. In practice, six scenarios account for almost every file where private is genuinely the right answer: you’ve been declined by the bank and the alternatives don’t fit; you have an urgent or firm closing a bank can’t meet in time; you need bridge financing to buy before your current home sells; your credit is bruised; your income is self-employed or otherwise complex; or you need to clear tax arrears or a lien that’s blocking a traditional refinance. If your situation isn’t one of these, a private mortgage usually isn’t the cheapest or best path, and we’ll say so.

The common thread is that a private lender solves a problem the banks structurally can’t: they lend on equity and the overall picture rather than a rigid checklist, and they move fast. That flexibility comes at a price — rates and fees are typically higher than a bank — which is exactly why it should be a short-term bridge, not a permanent home. Our starting point is always the money page: the full picture of how private lending works lives on our private mortgage overview, and this page is about the narrower question of when it’s the right call versus when to keep looking.

Declined by the bank, urgent closings, and bridge financing

Being declined by a bank feels final, but it usually just means you didn’t fit one lender’s narrow rules on that day. Before jumping to private, the right move is to work down the ladder: an A-lender you weren’t sent to, then a B-lender (see A-lender vs B-lender) who sits between the banks and private and is usually cheaper. Private is the right tool when even those don’t fit — or when the reason for the decline can’t be fixed inside your timeline.

Timing is where private lenders earn their keep. If you have a firm closing date and your financing falls through, or the funds you were counting on are delayed, a bank simply can’t re-underwrite fast enough — and a blown closing can cost you your deposit or the deal. A private lender can often close in days because approval leans on equity, not weeks of income verification. The same speed makes private a natural fit for bridge financing: when you’ve bought your next home but your current one hasn’t sold yet, a short private bridge covers the gap and unwinds the moment your sale completes.

Bruised credit, self-employed income, and tax arrears

The other three scenarios are about the file, not the clock. If your credit is bruised — recent late payments, collections, or a past bankruptcy or consumer proposal — A-lenders often decline outright, but a private lender can look past the score to the equity in your home while you rebuild. A private mortgage used this way is a bridge: it keeps you housed and financed for the 12–24 months it typically takes to re-qualify. Our private lender for bad credit page goes deeper on this path.

Complex income is just as common. If you’re self-employed, newly incorporated, commission-based, or you write income down for tax reasons, the paperwork that satisfies a bank may not exist yet — even though you clearly service the debt. Private lenders underwrite the whole picture. And when CRA tax arrears have turned into a lien, banks generally won’t refinance around it; a private lender can pay the arrears out of your equity, clear the lien, and set you up to refinance cleanly later. In every one of these cases the point isn’t to live on the private mortgage — it’s to fix the blocker and move on.

The exit plan: why private should be short-term

The single most important part of any private mortgage is the exit plan, and it’s the part cut-rate brokers skip. Because rates and fees are typically higher than a bank, the value of a private mortgage comes entirely from it being short-term; Ontario’s regulator, FSRA, stresses the same point: know your exit before you sign¹. A private mortgage with no exit is an expensive mistake carried indefinitely; a private mortgage with a clear, dated exit is a smart bridge that does its job and disappears.

So before you sign, the plan should already be written down: which milestone gets you out — rebuilt credit, seasoned self-employed income, cleared tax arrears, or a completed sale — and which lender you refinance into once you hit it. Most exits land on a B-lender first and then an A-lender as things fully stabilize; see alternative lending for the middle step and private lender vs bank for the end goal. We track your file against that plan and move you to lower-cost financing the moment you qualify, rather than letting the private mortgage quietly renew year after year.

How we decide with you — and the guardrails

Our process is deliberately built to talk you out of a private mortgage when a cheaper option exists. As an independent brokerage with access to 100+ lenders, we start at the cheapest lender that will realistically approve you and only work toward private if nothing better fits your situation or timeline. When private genuinely is the right call, we quote the rate, the lender fee, and the broker fee in writing before you commit — we won’t give you a number blind, and we won’t bury a fee. For how that pricing is built, see private mortgage rates, and for the honest trade-offs, private mortgage pros and cons.

A private mortgage is secured against your home, so we treat the decision with the seriousness it deserves: manageable payments, a realistic term, and a real exit, or we don’t recommend it. Mortgage Squad Advisors is a licensed brokerage under FSRA #13737, and every file is reviewed against the same standard — the right tool for the right situation, with a plan to get you back to the lowest-cost lender you qualify for. When you’re ready, start an application, ask Maya a quick question any time, or read how a mortgage broker and the bank-vs-broker comparison change your options.

What you get

Why Canadians choose Mortgage Squad Advisors.

Approvals based mainly on your home’s equity, not just credit score or income ratios

Fast turnarounds — private files can often close in days when a bank timeline can’t

A realistic option when you’ve been declined by the bank or your renewal wasn’t offered

Bridge financing to buy before you sell, or to close on time when other funds are delayed

Works for bruised credit, recent late payments, collections, or a past bankruptcy/consumer proposal

Accepts complex or self-employed income that A-lenders struggle to document

Can pay out CRA tax arrears or other liens that block a traditional refinance

Rates and fees are typically higher than a bank — we quote them in writing so there are no surprises

Structured as short-term (often around a year) with a mapped exit back to an A- or B-lender

We compare 100+ lenders first, so private is only recommended when it’s genuinely the best fit

How it works

Three simple steps, no pressure.

Confirm it’s the right tool

We look at why the banks said no (or why time is short) and check whether an A-lender or B-lender could still work. If a cheaper option fits, we take it. Private is only on the table when it’s genuinely the best route for your situation.

Structure the bridge + exit

If private is the right call, we quote the rate, lender fee, and broker fee in writing, and set a realistic term — usually short. Just as important, we map the exit: the specific milestones (rebuilt credit, seasoned income, cleared arrears) that qualify you to refinance out.

Close, then work the exit plan

Your lawyer closes the private mortgage so your purchase or deadline is protected. From there we track your file and move you back to a lower-cost lender the moment you qualify — so the private mortgage stays the short chapter it was meant to be.

Start your pre-approval — 5 min

FAQ

Common questions, answered.

Don’t see yours? Ask Maya — instant answer, any time.

When does it actually make sense to use a private lender?

In six main situations: you’ve been declined by the bank, you have an urgent or firm closing that a bank can’t meet, you need bridge financing to buy before you sell, your credit is bruised, your income is self-employed or otherwise complex, or you need to clear tax arrears or a lien. In each case a private lender solves a problem the banks can’t — as a short-term bridge, not a forever mortgage.

Is a private mortgage a bad idea?

Not inherently — it’s a specialized tool that’s wrong in some situations and exactly right in others. Used as a short-term bridge with a clear exit back to an A-lender, it can save a purchase or carry you through a rough patch. It becomes a problem when it’s used with no exit plan and the higher cost is carried indefinitely. The deciding factor is the plan, not the product.

How much higher are private lender rates and fees?

Rates and fees on private mortgages are typically higher than a bank, because private lenders take on more risk and lend faster. There’s usually a lender fee and a broker fee on top of the rate. Exact numbers depend on your equity, property, and file, so we won’t quote a figure blind — we put the full rate and every fee in writing before you commit anything. See our private mortgage rates page for how pricing is built up.

I was declined by the bank — does that mean I have to go private?

Not necessarily. A bank decline often just means you don’t fit that one lender’s narrow rules. Before private, we check B-lenders (alternative lenders) who sit between banks and private and are usually cheaper. Private comes in when even B-lenders don’t fit or the timing is too tight. We work down from the cheapest option that will actually approve you.

How fast can a private lender close?

Faster than a bank in most cases — private files can often close in a matter of days rather than weeks, because approval leans on the equity and property rather than a long income-verification process. That speed is exactly why private is the right tool for an urgent or firm closing where a bank simply can’t meet the date.

Can a private lender help with self-employed or complex income?

Yes. This is one of the most common reasons to use one. If you’re self-employed, newly incorporated, commission-based, or write down income for tax purposes, A-lenders can struggle to document you. Private lenders focus on equity and the overall picture, so they can approve strong files that a rigid bank box rejects. The goal is still to season that income and move you to a lower-cost lender.

Can a private lender pay off CRA tax arrears?

Often, yes. Unpaid CRA balances can turn into liens that block a normal bank refinance, and banks generally won’t advance funds while arrears sit on title. A private lender can pay out the arrears using your home equity, clearing the lien so you can later refinance cleanly. It’s a bridge to fix the tax problem, not a permanent solution.

What is the exit plan, and why does it matter so much?

The exit plan is how you get out of the private mortgage and into a cheaper A- or B-lender once the underlying issue is fixed — credit rebuilt, income seasoned, arrears cleared, or the sale completed. It matters because the whole value of a private mortgage is that it’s short-term. We define the exit before you sign, then track your file and refinance you out the moment you qualify.

Is my home at risk with a private mortgage?

A private mortgage is secured against your home like any mortgage, so falling behind carries real consequences, including the risk of enforcement. We take that seriously: we only recommend private when the numbers and the exit plan make sense, disclose every cost in writing, and structure the term so the payments are manageable while you work toward refinancing out. If a file doesn’t have a realistic exit, we’ll tell you.

Related products

Private mortgage overview Private lender vs bank Private mortgage pros and cons Declined by the bank Bridge financing Self-employed mortgage CRA tax arrears mortgage Alternative lending overview

Sources & references

Figures on this page are sourced below and re-checked each quarter. Rates, insurer rules and lender policies change — confirm anything you plan to act on with a licensed advisor.

1. Financial Services Regulatory Authority of Ontario (FSRA), Private Mortgages (Accessed September 2026) — Private mortgages usually carry higher rates and fees than bank mortgages, are often short-term and interest-only, and borrowers need a plan to exit or refinance.

Ready when you are.

No obligation, and no credit pull to begin. A licensed advisor reviews your file with you, and Maya, our AI assistant, can answer quick questions any time.

Start your pre-approval — 5 min Chat with Maya