Private lending
Private Mortgages in Toronto: When They Make Sense (and When to Walk Away)
Rates, lender fees, broker fees, terms, and — most importantly — your exit strategy.
What a private mortgage really is
Private mortgages are funded by individuals or Mortgage Investment Corporations (MICs) rather than chartered banks. They lend based on the property's equity position, not just the borrower's income and credit. Loan-to-value is the primary risk metric — most private lenders cap combined LTV at 75–85% in Toronto.
When private financing genuinely makes sense
- Stopping a power of sale or foreclosure with equity intact
- Bridging between closings when a sale is firm but timing doesn't line up
- Bruised credit that needs 12–18 months to rebuild before re-qualifying for an A or B lender
- Self-employed owners with strong cash flow but messy declared income
- Renovation or land assemblies before a refinance or construction takeout
What to insist on in the commitment letter
- Written rate, lender fee, and broker fee — and all-in cost calculation
- Open terms or low penalty after a minimum period
- Clearly documented exit strategy
- Independent legal advice (ILA) where required
When to walk away
If the only exit plan is 'hope the market goes up' or 'hope I qualify in a year' without a concrete income or credit change driving that, the math usually doesn't work. A reputable Toronto broker will tell you when a private mortgage isn't the right call.
Frequently asked questions
+What rates do private mortgages charge in Toronto?
Rates are priced based on position, LTV, property type, and borrower profile, and are materially higher than bank rates. Always compare full all-in cost (rate plus lender and broker fees) over the term, not just the headline rate.
+How fast can a private mortgage close?
Standard private deals close in 5–10 business days. Emergency funding (e.g. stopping a power of sale) can close in 48–72 hours with the right lender and a complete file.
Keep going
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Private mortgages can involve higher rates, fees, and risks than traditional mortgages. Borrowers should understand the full cost of borrowing, have a clear exit strategy, and consider independent legal and financial advice before signing.