The Ultimate Private Mortgage Guide for Ontario

A private mortgage is funded outside conventional bank underwriting, often by an individual, mortgage investment corporation or other private capital source. The mortgage remains a registered legal charge and commonly has a short term.

Property value, location, mortgage position, LTV, marketability, use of funds, borrower conduct and exit strategy are central. Income and credit can still matter even when the lender is primarily equity focused.

Borrowers should calculate interest, lender fees, brokerage fees, appraisal, title insurance and legal expenses. The amount received after deductions may be materially lower than the registered mortgage amount.

A short term creates a maturity deadline. If the exit is delayed, the borrower may face extension fees, a new appraisal, legal expenses or enforcement. A private mortgage should therefore include a monitored exit plan from the beginning.

Private financing is strongest when the benefit of solving the immediate problem exceeds the total cost and the exit is realistic. It may be inappropriate when it only increases debt without addressing the underlying issue.