Private Mortgage Rates in Ontario 2026: What to Expect

Current Private Mortgage Rate Ranges

Private mortgage rates in Ontario are not published on a rate sheet the way bank mortgage rates are. Each deal is priced individually based on the risk the lender is taking. That said, there are well-established ranges that hold across the market in 2026.

These ranges reflect the rates charged by the lender. Additional costs including lender fees, brokerage fees, legal fees, and appraisal costs add to the total cost of borrowing. For a detailed breakdown of all costs, see our guide to private mortgage fees.1

What Drives Your Rate

Understanding the factors that influence your rate gives you the ability to improve your position before applying. Private lenders weigh these factors differently than banks, but the logic is consistent: lower risk to the lender means a lower rate for you.

Loan-to-Value Ratio (LTV)

This is the single most important factor. LTV is the mortgage amount expressed as a percentage of the property's appraised value. A borrower seeking 50% LTV will almost always receive a better rate than one seeking 75% LTV, because the lender's capital is better protected by the equity cushion.

• Under 50% LTV: Best rates available, typically 8% to 9%
• 50% to 65% LTV: Mid-range rates, typically 9% to 11%
• 65% to 75% LTV: Higher rates, typically 10% to 13%
• Above 75% LTV: Limited availability, rates of 12% to 15% or higher

Property Type and Location

Private lenders care deeply about the property because it is their security. Properties that are easy to value and easy to sell in a default scenario attract better rates.

Exit Strategy

Lenders want to know how you plan to repay the mortgage at term end. A clear, realistic exit strategy reduces the lender's risk and can influence the rate downward. Common exit strategies include refinancing with a B-lender or bank, selling the property, or receiving a known future payment (such as an inheritance or business sale proceeds).

Borrower Profile

While private lenders do not rely on credit scores the way banks do, your overall profile still matters. Factors include:

• Payment history: Evidence that you make payments reliably on existing obligations
• Income: Even if not provable to bank standards, some evidence of income demonstrates repayment ability
• Reason for borrowing: A borrower consolidating debt to improve their financial position may get a better rate than one with an unclear purpose
• Legal issues: Active lawsuits, CRA liens, or pending power of sale proceedings add risk and can increase rates5

First Mortgage vs. Second Mortgage Rates

The position of the mortgage on title has a significant impact on rate. A second mortgage is subordinate to the first mortgage, meaning the first mortgage lender gets paid first in a default scenario. This additional risk translates directly to higher rates.

Private Rates vs. B-Lender vs. Bank Rates

It helps to see where private mortgage rates sit relative to other lending tiers. This context is important because your goal should typically be to use a private mortgage as a temporary bridge to lower-cost financing.

The gap between private rates and bank rates is substantial, which is exactly why private mortgages are designed as short-term solutions. Staying in a private mortgage longer than necessary costs you money. A good mortgage broker will help you build a plan to transition to cheaper financing as quickly as your situation allows.

Understanding the Total Cost of Borrowing

The interest rate alone does not tell the full story. To compare private mortgage options accurately, you need to consider the total cost of borrowing, which includes all fees and charges over the term.

Example: $300,000 First Mortgage at Three Different Rate/Fee Combinations

In this example, Option A has the lowest total cost despite the higher fees, because the interest rate is the dominant cost driver over a 12-month term. Always calculate the total cost of borrowing rather than fixating on any single component.

How to Improve the Rate You Qualify For

You have more control over your private mortgage rate than you might think. Several strategies can meaningfully improve the terms you receive.

1. Maximize your equity position. If you have the ability to pay down existing debt or make a larger down payment to reduce the LTV, the rate improvement can be significant.
2. Prepare a clear exit strategy. Show the lender exactly how you plan to transition to conventional financing. A detailed plan with realistic timelines signals a lower-risk borrower.
3. Organize your documentation. Even though private lenders are flexible on income verification, providing whatever documentation you can (bank statements, tax returns, contracts, invoices) strengthens your file.
4. Choose your property wisely. If you are purchasing, a property in a strong Ontario market with good comparables will attract better rates than one in a less liquid area.
5. Work with an experienced broker. A broker with strong lender relationships and deep experience in private mortgage lending can often negotiate better terms than you would obtain on your own.
6. Time your application. While less of a factor than in institutional lending, market conditions can affect private rates. When investor demand for mortgage investments is high, rates may be slightly more competitive.

Rate Trends and What to Watch in 2026

Private mortgage rates in Ontario are influenced by several market factors that are worth monitoring if you are planning to borrow in 2026.

Bank of Canada Rate Decisions

While private mortgage rates do not move in lockstep with the Bank of Canada overnight rate, they are influenced by the broader interest rate environment. When the Bank of Canada reduces rates, there is generally some downward pressure on private rates as well, though the effect is muted compared to conventional mortgages.4

Ontario Housing Market Conditions

Strong property values benefit borrowers seeking private mortgages because they improve LTV ratios. In a rising market, the equity cushion is larger, which reduces lender risk and can lead to better rates. Conversely, if property values decline in certain markets, lenders may become more conservative with their LTV limits and rate pricing.

Investor Appetite

Private mortgage funds come from investors seeking returns. In 2026, with leading GIC rates around 3.6-3.85% and Ontario MIC investments targeting roughly 9-11% annual returns, private mortgage investing remains attractive to many investors. This generally keeps the private mortgage market competitive.

The rate you are offered today is a snapshot. Your goal should be to use the private mortgage strategically, address whatever prevented you from qualifying conventionally, and move to lower-cost financing as soon as possible. The rate matters less than the plan.