A private mortgage should be underwritten twice: once for the loan that closes today and once for the lender expected to pay it out. Most expensive private-mortgage problems begin because the second underwriting never happened. “We will refinance next year” is not a plan until someone has identified the future lender category, the requirements that fail today and the evidence that will exist by the exit date.
Month 0: write an exit memo before the private funds
FSRA’s supervisory guidance emphasizes realistic exit strategies for private mortgages. The useful interpretation is operational: every blocker gets an owner, a metric and a date.
Months 1–3: stabilize payment conduct and stop creating new obstacles
The first quarter is about clean execution. Make every mortgage and debt payment on time, avoid unnecessary new inquiries, preserve tax and insurance compliance, and maintain a cash buffer. If the private mortgage was used to consolidate revolving debt, prevent those balances from rebuilding.
Months 1–6: build the income evidence your target lender actually uses
Employees may need stable tenure and documents. Self-employed borrowers may be waiting for a fiscal year, tax filing, financial statements or a longer business history. Do not wait for maturity to discover that the target lender wants a document that takes weeks to produce. Align accounting and mortgage timelines early.
Months 3–6: repair the credit factors that are under your control
Focus on material underwriting constraints rather than generic score hacks. Correct errors, lower required revolving balances, resolve lender-mandated collections and maintain clean payment history. FCAC notes that payment history matters to credit scoring, but the exit lender will also read the underlying report.
Months 3–9: improve debt-service ratios without wasting liquidity
If qualification is tight, calculate which debt payout creates the largest monthly-payment reduction per dollar of cash. Paying a $15,000 installment loan with a $700 monthly payment may improve ratios far more than paying a $15,000 credit card with a smaller required payment. Underwriting efficiency matters.
Property issues need their own project plan
If construction, renovation, zoning, tenancy or deferred maintenance blocked institutional financing, document completion. Keep permits, invoices, photos and contracts. Order the exit appraisal early enough that an unexpected valuation does not surface in the final week.
Month 6–9: perform a dry-run underwriting
Do not wait until the private mortgage is close to maturity to ask whether the plan worked. Run the target lender’s likely ratios, pull updated credit, review income and estimate property value. A dry run can reveal that one more debt needs to be paid or that another tax year is necessary while there is still time to change course.
Three months before maturity: convert the plan into a live application
The exact lead time varies, but private exits benefit from margin. Obtain an up-to-date private mortgage statement, identify any payout or discharge requirements, refresh income and credit, and start appraisal/legal work when appropriate. An approval completed early is safer than an extension negotiated under pressure.
Choose A vs B based on the file today—not the borrower’s aspiration
If the borrower now fits prime policy, move directly to the lower-cost market. If one defined issue remains, a B lender can be a valuable intermediate step. Forcing a marginal A application that fails days before maturity can make the eventual alternative financing more urgent and expensive.
Calculate whether one more private renewal destroys the economics
If the primary exit fails, compare the full cost of extension—including fee, interest and equity erosion—with a B-lender bridge or voluntary sale. FSRA has highlighted how repeated private renewals can increase balances and reduce equity. “Just renew for another year” should be treated as a new financing decision.
The exit scorecard
A private mortgage exit is not a single refinance application. It is a twelve-month project that turns expensive flexibility into cheaper eligibility. The sooner that project starts, the less likely the borrower is to pay for another year of private capital simply because the paperwork and behaviour change began too late.
The exit file should be built continuously, not reconstructed at month eleven
Keep a digital folder from day one with every private-mortgage payment, updated property-tax status, income records, debt statements and evidence of credit repair. For self-employed borrowers, add monthly business statements and tax filings as they become available. This turns the exit application into a progress report instead of a frantic reconstruction.
Measure whether the bridge is actually improving the file
Every 90 days, compare the borrower with the day the private mortgage closed. Credit utilization should be lower, documentation stronger, debts reduced, property condition improved or the sale closer. If none of the intended blockers is moving, intervene early. The most dangerous private mortgage is one where six months pass and the borrower is in exactly the same underwriting position.
Questions about this topic
Practical answers for Ontario borrowers reviewing this mortgage topic.
How do I get out of a private mortgage?
The common exits are refinancing with an A or B lender, selling the property, using known funds to repay, or another planned capital event. The best route should be identified before the private mortgage closes and worked on during the term.
How soon should I start refinancing a private mortgage?
Start the exit work immediately, but formal re-underwriting should usually happen well before maturity—often several months earlier—so there is time to fix documentation, appraisal or credit issues. The exact timeline depends on the planned lender and file.
Can I go directly from a private lender to a bank?
Yes, if the borrower and property meet the bank’s requirements at the time of exit. Some files need an intermediate B-lender stage; others can move directly to prime financing.
What if I cannot qualify before the private mortgage matures?
Identify the gap early. Options may include a suitable alternative-lender refinance, negotiated extension, another private structure, sale or other repayment source. Repeated private renewals can erode equity, so the backup should be costed before the deadline.
Sources & authorities reviewed
Primary sources reviewed for this article. Mortgage rules, lender policies and relief programs can change, so the verification date is shown for each source.
You got your client a private mortgage, but do they have a plan to get out?
Financial Services Regulatory Authority of Ontario
FSRA supervisory guidance emphasizing a realistic, documented exit strategy for private mortgages.
Verified August 13, 2026
What you need to know about alternate/private mortgages
Financial Services Regulatory Authority of Ontario
Ontario consumer guidance on alternate/private mortgage costs, short terms, risks and exit planning.
Verified August 13, 2026
What could happen if you don’t leave a private mortgage
Financial Services Regulatory Authority of Ontario
Consumer example illustrating how repeated private-mortgage renewals and added fees can erode equity.
Verified August 13, 2026
Mortgage Product Suitability Assessment
Financial Services Regulatory Authority of Ontario
FSRA guidance on knowing the client, knowing the product, comparing options, explaining rationale and documenting suitability.
Verified August 13, 2026
Credit report and score basics
Financial Consumer Agency of Canada
Federal consumer guidance on how payment history and missed payments can affect creditworthiness.
Verified August 13, 2026
Minimum qualifying rate for uninsured mortgages
Office of the Superintendent of Financial Institutions
Current federal MQR framework and the treatment of qualifying uninsured straight switches at renewal.
Verified August 13, 2026
Related Ontario Mortgage Guides
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