Private Mortgages in Ontario
A private mortgage is a short term, equity based loan funded by an investor or a mortgage investment corporation rather than a bank. It is not a long term answer and we never present it as one. It is a bridge: twelve to twenty four months to solve a timing problem, clear arrears or repair credit, with a written plan to move back to a prime lender.
- Typical loan to value
- Up to 75% to 80% of appraised value in major Ontario markets
- Typical term
- 12 to 24 months, interest only payments
- Closing speed
- Often within 5 to 10 business days on a clean appraisal
When a private mortgage is the right tool
Private lending is driven by the property, not the paystub. That makes it the right instrument in a narrow set of situations where speed or flexibility matters more than the rate.
- ◆A firm closing date that a bank cannot meet
- ◆Recent bankruptcy, consumer proposal or collections still on the bureau
- ◆Property tax or mortgage arrears, or a power of sale that must be stopped
- ◆CRA debt that must be cleared before a prime lender will fund
- ◆Bridge financing between a purchase and a sale that has not closed
- ◆Unconventional property that mainstream lenders will not touch
Understand the real cost before you sign
Private mortgage pricing in Ontario is meaningfully higher than bank pricing, and there are lender and brokerage fees deducted on funding. Anyone who is vague about those numbers is not doing you a favour. You should receive, in writing, the interest rate, the lender fee, the brokerage fee, the term, the payment amount and the renewal or discharge conditions before you commit to anything.
Every private placement we arrange comes with an exit plan attached: the specific credit or income milestones you need to reach, the month we intend to refinance you, and which prime or alternative lender we are targeting. If a broker cannot describe your exit, the placement is not finished.
First mortgages, second mortgages and seconds behind a good rate
If your existing first mortgage carries a low rate from a previous term, breaking it is usually the wrong move. A second mortgage registered behind it lets you access equity while leaving the cheap first mortgage untouched, and it is discharged as soon as the situation resolves.
Where the first mortgage is already in arrears or at an uncompetitive rate, a single private first mortgage that consolidates everything into one payment is generally cleaner and cheaper than layering a second on top.
Common Questions
What credit score do I need for a private mortgage in Ontario?
There is no minimum. Private lenders underwrite the property and the equity position rather than the credit score. Discharged bankruptcies, consumer proposals and collections are all workable when there is sufficient equity, generally 20% to 25% or more.
How quickly can a private mortgage close?
Once we have an appraisal and a lawyer engaged, five to ten business days is typical, and urgent power of sale files can move faster. That speed is the main reason private lending exists.
How do I get out of a private mortgage?
By refinancing to an alternative or prime lender once the underlying issue is resolved. We build that timeline into the placement from day one and start the transition work three to four months before the private term matures.
Let us look at your file.
Blackwood Mortgage Partners works with clients across Ontario from our Toronto office. Call 416-990-3790 or book a time that suits you.
Other Services
Self Employed Mortgages
Business owners, incorporated professionals and contractors placed with lenders who read real financials, not just a T4.
Mortgage Renewal
The renewal letter is an offer, not a verdict. We shop the whole market before your maturity date.
Investment Property Financing
Rental, duplex and multi unit financing structured so the next purchase is still possible.
Business Owner Mortgages
Incorporated owners qualified on the whole business: salary, dividends, retained earnings and add backs.