When banks say no, a private mortgage can get a deal done. Here is a clear explanation of what private mortgages are, how they work, and when they make sense in Ontario.
What is a private mortgage?
A private mortgage is a loan from a private lender or mortgage investment corporation (MIC) rather than a bank, secured primarily by the equity in the property. Decisions are based largely on the property and the borrower’s equity rather than rigid income and credit rules.
How it works
Private lenders focus on the loan-to-value and the exit plan. Terms are usually shorter — often around a year — interest-only, and priced higher than bank rates to reflect the added risk and speed. The plan is typically to refinance into conventional financing or sell within the term.
Who it is for
Private mortgages suit borrowers with credit challenges, self-employed or hard-to-document income, unique properties, time-sensitive purchases, or situations like stopping a power of sale or bridging between deals.
The trade-off
You pay more for speed and flexibility. Used strategically — as a short-term tool with a clear exit — a private mortgage can unlock opportunities that would otherwise be impossible.
How Gurpinder Gaheer can help: Private Mortgage Lending in Ontario · Book a free 30-minute consultation