What private lenders care about
Equity and exit. They lend against the property's value and how quickly you can repay or refinance, rather than the income ratios that drive bank underwriting.
Typical structure
Short terms, interest-only payments, and fees charged by the lender and broker. Rates are meaningfully higher than bank pricing, and loan-to-value limits are more conservative.
- One-year terms are common
- Interest-only payments keep monthly cost down
- Lender and broker fees are disclosed up front
- First or second position depending on existing debt
Good reasons to use one
Buying time to sell, funding a renovation that makes a property financeable, clearing tax arrears or a power of sale, closing a deal with an unconventional property, or bridging while credit is repaired.
Always have the exit written down
The plan should name the event that ends the private mortgage - a sale, a refinance at a specific date, or a credit milestone - before you sign. Renewing a private mortgage repeatedly is how the cost gets out of hand.
Frequently asked questions
- Are private mortgages regulated?
- They are arranged through FSRA-licensed brokerages in Ontario with disclosure requirements.
- How much equity do I need?
- It varies by property and location. Urban GTA properties typically qualify at higher loan-to-value than rural ones.
- How fast can one close?
- Often within days, which is a big part of the appeal.