Editor's note, October 6, 2026: this article was reviewed and rewritten in our accuracy check. An earlier version contained rate and fee ranges and cost examples we could not trace to a source; they have been removed or replaced with figures from the sources listed at the end of the article.
A private mortgage is a loan from an individual or a private company rather than a bank, credit union or other regulated lender. In Ontario most are arranged by licensed mortgage brokers. Private lenders aren't bound by OSFI's stress test, so they can lend when a bank won't, but that flexibility comes at a cost.
What FSRA says to watch for
Ontario's regulator, the Financial Services Regulatory Authority (FSRA), has urged consumers to understand how private mortgages differ: higher lender fees, interest-only payments and shorter terms are common. In a survey it commissioned, a majority of homeowners wrongly believed private mortgage payments go toward principal as well as interest. FSRA's advice: for many people a private mortgage should be a short-term stop-gap, not a long-term solution.
When one can make sense
- A short, defined gap: for example closing a purchase before a sale completes, when a bridge loan isn't available.
- Income a bank can't yet verify, such as a new business, while you build two years of records.
- Repairing credit after a specific event, with a plan to move to a regular lender.
- A property a bank won't finance as it is, for example one needing major work, while it's renovated.
The exit is the whole plan
Before you sign, know exactly how you'll repay the loan when the term ends: a sale, a refinance with a regular lender once you qualify, or another defined event. If the exit fails, you may have to renew at the lender's terms or face enforcement. Ask what renewal or extension would cost.
What to check in the commitment
- The interest rate, and whether payments are interest-only.
- Every fee: lender fee, broker fee, legal fees for both sides, and any renewal or discharge fees.
- The term, and whether you can repay early without a penalty.
- What happens if a payment is late.
- The total cost of borrowing over the term, in dollars.
Protect yourself
- Use a broker and brokerage licensed by FSRA; you can check a licence on FSRA's website.
- Get independent legal advice before you sign.
- Don't sign anything you don't understand, and never sign a blank form.
Frequently asked questions
Are private mortgages regulated in Ontario?
The mortgage brokerages and brokers that arrange most private mortgages must be licensed by FSRA under the Mortgage Brokerages, Lenders and Administrators Act, 2006, and they must give you written disclosure about the mortgage, including its cost and their fees, before you commit. Private lenders aren't bound by OSFI's stress test.
Can a private mortgage be a second mortgage?
Yes. Many private loans are registered behind an existing first mortgage. Your first lender's terms may restrict additional borrowing, so check your mortgage and ask your lawyer.
What happens if I can't repay when the term ends?
The lender may offer to renew, usually for a fee, or may enforce. Under Ontario's Mortgages Act, a lender can sell the home under power of sale after a default of at least 15 days and a notice period of at least 35 days, and you can stop the sale by paying the arrears and costs before it happens. See our power of sale guide.
Not sure a bank will lend? Talk to a licensed mortgage professional first; Summitly's mortgage financing is arranged through our partner, Mortgage Squad Advisors. You can also ask Zara, Summitly's AI virtual agent.
