Private mortgage lenders in Ontario serve roughly 8%-12% of the residential mortgage market in 2026 and make sense in exactly three scenarios: bridging a credit or income event with a clear 12-24 month exit, funding short-timeline purchases (7-21 day closings), and accessing equity when the OSFI stress test or self-employment history blocks A-lender approval. Rates run 8.99%-12.99% plus lender fees of 1.5%-3.0%, materially above bank pricing — but for the right file, the math still works because the alternative is missing the deal entirely. The wrong file in private lending becomes an expensive trap that gets worse every renewal.
Who actually lends in the Ontario private mortgage market
The Ontario private mortgage market is dominated by three lender categories: Mortgage Investment Corporations (MICs), Mortgage Investment Entities (MIEs), and individual private lenders pooled through licensed brokerages. The largest names operating in 2026 include CMI Mortgage Investments, Antrim Investments, Fisgard Asset Management, Calvert Home Mortgage, Romspen, Trez Capital, Vector Financial, Foremost Mortgage, and Atrium Mortgage Investment Corporation. All operate under FSRA (Financial Services Regulatory Authority of Ontario) oversight through the Mortgage Brokerages, Lenders and Administrators Act.
The capital flowing into MICs comes from Canadian investors seeking yield — typically retired professionals, RRSP-eligible investment portfolios, and family offices targeting 7%-10% net annual returns. That return target is what drives mortgage rates in this segment: a MIC needs to charge borrowers enough to deliver investor returns after operating costs (typically 1.5%-2.5% management fees) and loan loss provisions (typically 0.5%-1.0% of portfolio). The math compounds to the 9%-13% borrower rates we see in 2026.
How private lenders differ from B-lenders
B-lenders (Equitable Bank, Home Trust, MCAP Alt-A, B2B Bank, Bridgewater Bank) sit between A-lenders and private lenders in both pricing and underwriting. B-lender rates in 2026 run 5.49%-6.99% — meaningfully cheaper than private — and they conduct full income verification and stress-test the file, but with more flexibility on documentation, credit, and property type. Private lenders skip the stress test entirely, qualify on equity and exit strategy, and accept files that B-lenders decline. The progression for most Ontario borrowers in distress is: A-lender decline → B-lender decline → private lender approval.
The five scenarios where private lending is the right answer
Private mortgages serve specific use cases where the speed, flexibility, or qualification model justifies the higher cost.
- Closing in 7-21 days. A bank funding timeline is 25-45 days. If you've waived conditions on a purchase and the bank can't fund in time, a private bridge funded in 5-7 business days saves the deal and the deposit.
- CRA tax debt that's blocking refinance. Most A-lenders won't fund against unresolved CRA arrears. A private lender will, conditional on the CRA payout funded directly at closing.
- Self-employed with thin tax filings. The contractor showing $48k in net business income but $140k in real cash flow needs 2 clean years of NOAs for A-lender. Private fills the 24-month gap.
- Foreclosure or power-of-sale rescue. A private second mortgage at 11.99% buys 12-18 months to rehabilitate credit, sell on owner-controlled terms, or refinance back to A-lender.
- Equity takeout to fund a small business or major repair. Burst pipe causing $80k of damage with no insurance coverage; a private 12-month second funds the repair while insurance dispute is resolved.
The common thread: a defined exit path within 12-24 months. Every credible private mortgage broker — at Sage, Right at Home, KW Toronto, Mortgage Architects, or DLC — will walk through the exit before recommending the product. Without a credible exit, you're not solving a problem, you're delaying it at 12% interest. Run scenarios with Ask Zara before committing.
How pricing actually works on Ontario private mortgages
Private mortgage pricing in 2026 has three components that every borrower needs to understand. First, the interest rate: typically 8.99%-12.99% on residential first mortgages, 10.99%-13.99% on residential second mortgages, and 11.99%-15.99% on bridge or construction private financing. Second, the lender fee: a one-time charge at funding, typically 1.5%-3.0% of the loan amount, paid from the loan proceeds at closing. Third, the broker fee: if a broker is involved, an additional 1.0%-2.0% of the loan amount, also paid at closing.
On an $80,000 second mortgage from CMI at 9.99% plus 2.0% lender fee plus 1.5% broker fee with a 12-month term, the borrower receives $77,200 net at closing, pays $665/month interest-only, owes $80,000 at maturity, and has paid roughly $10,800 in total interest plus fees. That's an effective APR of approximately 14.5% — high, but the calibration is that without this loan, the borrower's exit strategy (refinance, sale, credit recovery) is impossible. FSRA requires all-in APR disclosure in writing under the Cost of Borrowing regulations before funding.
Watch the legal and closing cost stack
Private mortgage closings carry meaningfully higher legal and ancillary costs than A-lender closings. Lawyer fees typically run $1,800-$3,200 (versus $800-$1,200 for an A-lender refinance), property appraisals are required at $450-$700, title insurance through FCT or Stewart Title is $350-$550, and administration / discharge fees add another $250-$450. On an $80k loan, total closing costs often hit $4,500-$6,800 before lender and broker fees. Net proceeds to the borrower after all costs typically land at 88%-92% of the gross loan amount.
The exit strategy is the entire deal
Every Ontario private mortgage broker who survives in this business teaches the same lesson: the exit strategy is the entire deal. A clean exit means the borrower has a concrete, written plan to refinance to A-lender pricing, sell the property, or pay out the loan from other sources within the original term — typically 12 months, occasionally 24 months. A weak exit means renewing the private mortgage at maturity, which usually means the rate goes up (because the borrower's underlying problem hasn't been solved) and another round of lender and broker fees gets charged.
Credible exit paths in 2026:
- Self-employment NOA rehabilitation: File two clean self-employment tax years showing supportable income; refinance to A-lender at month 24.
- Credit score recovery: Pay off the consumer debt that pushed you to private; rehabilitate Beacon score to 680+ over 12-18 months.
- Property sale: List and sell the property within 6-9 months; pay out the private at closing.
- Income event: Inheritance, business sale, RSU vest, or insurance payout funds the payout at maturity.
- Renovation completion: Construction-phase private gets refinanced to long-term A-lender once the property is occupiable and appraisable.
Get a free instant home valuation before agreeing to any private mortgage — the exit strategy depends on accurate valuation, and over-optimistic equity assumptions are the most common reason exits fail.
The FSRA regulatory framework you should know
Every mortgage broker, agent, and lender operating in Ontario must be licensed by FSRA. Mortgage brokerages hold corporate licences; individual brokers and agents hold personal licences requiring continuing education and annual renewal. Private lenders that originate loans through Ontario brokerages must register as Mortgage Administrators if managing loans on behalf of investors. The FSRA public register at fsrao.ca lets you verify any broker, agent, brokerage, or administrator before signing — and you absolutely should before signing.
FSRA's 2024 enforcement actions targeted bait-and-switch rate practices, undisclosed fees, and unsuitable mortgage recommendations. The regulator publishes enforcement decisions, license suspensions, and license revocations publicly. Pre-2026 enforcement trends suggest tighter oversight of fee disclosure, conflict-of-interest disclosure (especially where the broker is also an investor in the MIC), and the suitability assessment broker-agents are required to complete and document for every file.
Cost of borrowing disclosure
Under Ontario's mortgage broker regulations, every private mortgage commitment must include a Cost of Borrowing disclosure showing the APR (annual percentage rate) including all lender fees, broker fees, and applicable charges across the term. This must be delivered in writing before funding, with sufficient time for the borrower to review and ask questions. If the disclosure isn't provided or is materially inaccurate, you have grounds for a complaint to FSRA and potentially to reverse the transaction.
Frequently asked questions
Are private mortgages legal in Ontario?
Yes, private mortgages are fully legal and regulated under Ontario's Mortgage Brokerages, Lenders and Administrators Act (MBLAA) and overseen by FSRA. Any individual or entity arranging mortgages on behalf of borrowers or lenders must hold an FSRA licence as either a brokerage, mortgage broker, mortgage agent (Level 1 or Level 2), or mortgage administrator. The private lending pool itself is structured through Mortgage Investment Corporations (MICs) under Income Tax Act section 130.1, or through pooled investor structures registered with the Ontario Securities Commission for sophisticated investor exemptions.
What credit score do I need for a private mortgage?
Most Ontario private lenders have no minimum credit score requirement — they qualify on equity and exit strategy rather than credit. Borrowers with Beacon scores in the 450-600 range are routinely approved at MICs like CMI, Antrim, and Fisgard, conditional on sufficient equity (typically 75%-80% maximum LTV) and a defensible exit path within 12-24 months. The rate offered does scale with credit profile: a 680 Beacon score gets the same private file at 9.49% that a 540 Beacon score gets at 11.99%. Lender fees are typically higher on lower credit files as well.
How fast can a private mortgage close in Ontario?
Standard private mortgage closings run 5-12 business days from full application to funding. The fastest closings I've seen in 2026 are 48-72 hours on clean files where the borrower has an appraisal already done, equity is clear, and the lender's investment committee is already familiar with the broker. Rush funding is occasionally available at additional cost. The bottleneck is typically the appraisal (3-5 business days from order to report) and the legal package preparation at the lender's solicitor. Compare that to 25-45 days for an A-lender refinance and you see why private is the go-to for short-timeline deals.
Can I refinance from private back to a bank?
Yes, and that's typically the whole point. The most common exit from a 12-month private mortgage is a refinance to A-lender or B-lender pricing once the underlying qualification issue is resolved. The borrower spends 9-12 months rehabilitating credit, accumulating clean self-employment income history, or stabilizing employment, then refinances to A-lender or B-lender at maturity. Good private mortgage brokers will set you up with this exit path from day one — including specific milestones, credit-bureau monitoring, and a relationship with the eventual A-lender broker who will handle the takeout.
What happens if I can't pay out the private mortgage at maturity?
Three options. First, renew with the existing private lender — typically at a similar or slightly higher rate, with another round of lender fees (often 1%-2%). Second, refinance to a different private lender if pricing is more favorable or if the existing lender declines renewal. Third, the property is sold under power of sale if no renewal or refinance is available — Ontario's power-of-sale process under the Mortgages Act gives the lender authority to sell the property, recover the loan balance plus costs, and return any surplus to the borrower. Power of sale is faster and cheaper than judicial foreclosure but still takes 90-150 days from default to sale completion. Plan the exit before you sign.
Key takeaways
- Private mortgages are 8.99%-12.99% plus 1.5%-3.0% lender fee. All-in APR routinely lands at 13%-16% on residential files.
- The exit strategy is the entire deal. A 12-month private without a credible refinance or sale path becomes an expensive trap.
- FSRA licensure is required. Verify every broker, agent, brokerage, and administrator on the FSRA public register before signing.
- Five core scenarios: tight closing timeline, CRA tax debt, thin self-employment history, foreclosure rescue, and emergency equity takeout.
- B-lenders sit between A and private. Always check B-lender feasibility first — the cost gap is $5k-$15k per year on a typical second mortgage.
- Closing costs add 5%-9% to the loan. Plan for net proceeds of 88%-92% of gross loan amount after all fees.
