Private mortgages in Ontario: an honest guide

When a private mortgage is the right tool

• Self-employed income the banks won’t recognize at its real level
• Credit still recovering from divorce, illness, or a business setback
• A purchase that must close in days, not weeks
• Stopping a power of sale, or clearing CRA tax arrears
• Unusual properties or short-term flips banks avoid

What it really costs

Private money is priced for speed and flexibility: rates are higher than banks, plus a lender fee and broker fee. That sounds expensive until you compare it with the alternative — losing a deposit, a forced sale, or carrying 20%+ unsecured debt. The honest way to judge a private mortgage is total cost for the months you hold it versus the cost of the problem it solves.

The exit-strategy rule

Never take a private mortgage without a written exit plan. A proper plan names the milestone (credit score rebuilt, two years of business financials, property sold or stabilized) and the target date — usually 12–24 months — when you refinance back to a mainstream lender. A Mortgage Agent Level 1 licence does not permit arranging private mortgages, so if that is the right tool for you I will say so plainly and refer you to a Level 2 colleague — and the exit plan back to a mainstream lender is where I can help.

Red flags to avoid

• Fees that appear only at signing — every dollar must be disclosed in writing up front
• Unlicensed “consultants” arranging mortgages
• Renewal fees designed to trap you instead of graduate you
• Any lender who discourages you from getting independent legal advice

The bottom line

A private mortgage is a tool — powerful in the right situation, costly in the wrong one. Bring your situation to a licensed agent, get the total cost and the exit plan in writing, and make the decision with full information. That consultation, with me, is free.