Private Mortgages in Ontario
What private mortgages actually are, when they help, and how to exit cleanly.
What private lenders do differently
Private lenders — typically Mortgage Investment Corporations (MICs) or individual investors — underwrite on equity, not income. If your home has the equity, a private lender will fund the deal, often within days, when banks and B-lenders have declined. The trade-off is rate (8–12% typically) and fees (1–3% of the loan amount).
When private lending is the right answer
Private mortgages make sense for short-term needs: stopping a power of sale, funding a quick close, paying out tax arrears, bridging a divorce buyout, or holding a file until credit recovers enough to qualify with a B-lender. The plan should always include an exit — typically 12–24 months.
First, second, and third mortgages
Private lenders will fund first, second, and sometimes third mortgages. The math always works backwards from the home's value: total loans (first + second + third) typically can't exceed 75–80% of appraised value, depending on location and property type.
Fees, terms, and structure
Expect: 8–13% interest, 1–3% lender fee, 6- or 12-month interest-only terms with renewal options, prepayment open after 3 months, and 1–2% broker fee. All fees should be disclosed in writing upfront before you commit.
Exiting a private mortgage
A clean exit starts before you sign. Jay Klair structures every private file with a documented path back to a B-lender or prime lender within 12–24 months — typically by re-establishing payment history, paying off old collections, or waiting for bankruptcy seasoning to clear.
Have questions about your situation?
Every mortgage file has its own story. A 15-minute call with Jay is enough to know your real options.