Question 1

What is a private mortgage in Canada?

Accepted Answer

A private mortgage is a loan secured against real estate from a private lender (an individual or MIC fund) rather than a bank or credit union. Private lenders have more flexible approval criteria — they focus on the property's equity (LTV) rather than income or credit score. They are typically used for 1-year terms while borrowers restructure their finances to qualify for conventional financing.

Question 2

What are private mortgage rates in Ontario for 2026?

Accepted Answer

Private mortgage rates in Ontario typically range from 7% to 12% for first mortgages and 10% to 14% for second mortgages, depending on LTV, property type, and borrower risk. Lender fees of 1–3% and broker fees of 1–2% also apply. Rates are negotiable — a licensed broker with existing private lender relationships often secures significantly better terms.

Question 3

What is the maximum LTV for a private mortgage in Ontario?

Accepted Answer

Most private lenders in Ontario will lend up to 75–80% LTV on first mortgages for urban properties. Second mortgages (combined with the first) are typically capped at 80–85% of appraised value. Rural, unique, or hard-to-appraise properties may be capped lower. Always get an independent appraisal before applying.

Question 4

What fees does a private mortgage have in Ontario?

Accepted Answer

Private mortgage fees typically include: (1) lender fee — 1–3% of the loan amount; (2) broker fee — 1–2%; (3) legal fees — $1,500–$3,000; (4) appraisal — $400–$700; (5) title insurance — $300–$500. Most fees are deducted from the advance (in-hand amount). This calculator shows the net amount you receive after fees.

Question 5

How quickly can a private mortgage close in Ontario?

Accepted Answer

Private mortgages in Ontario can close in 5–10 business days compared to 30–45 days for bank mortgages. Speed is often the primary reason borrowers choose private. Brokers with established private lender relationships can sometimes close in 48–72 hours for urgent situations.

Question 6

Can I get a private mortgage with bad credit in Ontario?

Accepted Answer

Yes — private lenders focus on equity (LTV) rather than credit score. As long as you have sufficient equity in your property (typically 20–25% or more), most private lenders will approve regardless of credit history. However, a lower credit score may result in a higher rate or lower maximum LTV.

Question 7

What is the difference between a 1st and 2nd private mortgage in Canada?

Accepted Answer

A first private mortgage has first-charge priority against the property — the lender is repaid first in a default scenario. A second private mortgage sits behind an existing first mortgage and carries more risk, so rates are typically 2–4% higher. Combined LTV (first + second) is usually capped at 80–85% of appraised value by most private lenders.

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