Private Mortgage in the GTA & Ontario

When the bank says no, it feels like the end of the road. It is not. A private mortgage is a loan from a private lender or investor instead of a bank, secured against your property exactly like a regular mortgage. The rates are higher and the terms are shorter, usually one to two years. Used the right way, private lending is a bridge, not a trap. Here is the honest breakdown most brokers will not give you.

What a private mortgage actually is

A private mortgage works like any other mortgage. A lender registers a charge against your property and you make payments. The difference is who funds it. Instead of a bank, the money comes from a private individual, a group of investors, or a mortgage investment corporation, often called a MIC. Because these lenders take on more risk than a bank, they charge more. Expect rates several points above bank rates, plus a lender fee of one to three percent of the loan amount. Terms are short, usually twelve months and sometimes twenty-four. Many private mortgages are interest only, which keeps the monthly payment manageable while you work on your exit plan.

Why banks say no: the underwriter’s view

I spent years on the bank side, so let me tell you what the underwriter is really thinking. Banks do not decline you because you are a bad person. They decline you because your file does not fit their box. Bruised credit from a rough patch three years ago. Income that looks low on paper because you write off legitimate expenses. A debt ratio that misses the cutoff by half a percent. The underwriter’s job is to protect the bank, not to find a creative way to say yes. Clean files get approved fast. Creative files get declined. That is not evil, it is just how the machine works. A private lender looks at the same file and asks one question: is there enough equity to protect my money? If the answer is yes, you have a deal.

What private lending really costs

Let me be blunt about cost, because this is where people get hurt. A private mortgage costs more. Full stop. On a $400,000 private loan at nine percent interest only, you pay $3,000 a month in interest. Add a two percent lender fee ($8,000) and legal fees, and the first year is expensive. Anyone who tells you private lending is cheap is lying to you. But compare that to the cost of doing nothing. Losing a $50,000 deposit because your financing fell through days before closing. A power of sale that wipes out years of equity. Sometimes the expensive option is the cheapest one available. The key is going in with your eyes open and a plan to get out.

When a private mortgage makes sense

Private lending makes sense in specific situations. Your bank financing fell apart days before closing and you must close on time. You need to stop a power of sale or a tax sale. You are self-employed and need one clean year of tax returns before a bank will approve you. You bought a property that needs work before any bank will finance it. You need to pay out a separation agreement quickly. What all of these share: a short-term problem with a clear path back to normal lending. If there is no realistic exit, a private mortgage only delays the pain and adds interest to it. I will tell you straight if your situation is not a fit. I would rather lose your business today than watch you sign something that hurts you tomorrow.

Your exit strategy back to institutional lending

Every private mortgage I arrange starts with the exit, not the rate. Before you sign anything, we map out exactly how you get back to a bank or credit union in twelve to twenty-four months. Maybe that means twelve months of perfect payments to rebuild your credit score. Maybe it means filing one clean year of taxes. Maybe it means finishing the renovation so the property appraises higher. Then we put it on the calendar. At month nine we start the refinance application. At month twelve you are out. The private lenders I work with expect this. A private mortgage without an exit strategy is just expensive renting from a lender. With one, it can be the smartest move you ever make.

War stories from the private lending trenches

Two real stories. First, a couple in the GTA whose bank pulled their approval nine days before closing after a job change. The builder was threatening to keep their $80,000 deposit. We had private funds committed in seventy-two hours. They closed on time, and eleven months later we refinanced them into a bank mortgage at a great rate. Second, a business owner facing power of sale after a brutal year. His bank would not even return his calls. A private second mortgage stopped the sale and gave him breathing room. Private lending is not pretty. But when the alternative is losing everything, pretty does not matter.

Frequently Asked Questions

How fast can a private mortgage close?

Much faster than a bank. Once I have your application and property details, private lenders can commit within twenty-four to forty-eight hours and fund in as little as three to five business days. If you are facing a hard closing date or a power of sale deadline, speed is one of the biggest advantages of private lending. Call me at +1 905-781-1773 and I will tell you honestly whether your timeline is doable.

Will a private mortgage hurt my credit?

Most private lenders do not report to the credit bureaus, so the mortgage itself usually will not raise your score. Here is the insider angle though: twelve months of on-time private payments while you clean up old debts absolutely rebuilds your profile for the refinance. I have watched clients go from declined everywhere to bank approved in one year by following the exit plan we set on day one.

What happens if I cannot pay out the private lender at the end of the term?

This is the question you must ask before you sign. If there is no realistic exit, do not take the mortgage. That said, most private lenders will renew for another term if you have paid on time, usually with a renewal fee. It costs you, which is exactly why we build the exit strategy first and start the refinance process months before the term ends.

How much equity do I need for a private mortgage?

Most private lenders cap out around seventy-five to eighty percent of the property value, and the best pricing goes to deals under sixty-five percent. The more equity you have, the lower your rate and fee. Above eighty-five percent loan to value, private lending gets very difficult and very expensive. Send me your numbers and I will give you a straight answer in one call.