Private Mortgage Rates in Ontario 2026: What Drives Your Rate

How Private Mortgages Are Priced

Private mortgage rates in Ontario are not published on a public rate sheet the way bank mortgage rates are. Each deal is priced individually based on the risk the lender is taking, so this article does not quote rate ranges. No regulator or public body publishes private-lender rates, and a figure from one lender or one month would not describe your file. What can be explained is what lenders look at and why a quote can differ from one file to the next.

Private lenders generally price higher than banks because they accept situations a bank would not. Borrowers often come to a private lender because of credit issues, income that is hard to document, or a closing date that leaves no time for a conventional approval. The price reflects that added risk, and for that reason a private mortgage is usually meant to be short-term.

What Drives Your Rate

Understanding the factors lenders weigh helps you prepare before you apply. Private lenders weigh them differently than banks do, but the logic is consistent: the more risk the lender sees, the more the mortgage tends to cost.

Loan-to-Value Ratio (LTV)

Loan-to-value is the mortgage amount expressed as a percentage of the property's appraised value. It is usually among the most important factors. The more equity left in the property after the loan, the better protected the lender is, and the lower the pricing tends to be. A request for a large share of the property's value generally costs more, and may be harder to place at all.

Property Type and Location

The property is the lender's security, so lenders care how easy it is to value and sell if something goes wrong. In general terms:

• Properties in larger markets with plenty of comparable sales are easier to value and resell, which can help the pricing.
• Condos add a step, since lenders usually review the status certificate.
• Rural and small-town properties can have fewer buyers, harder appraisals and longer selling times, which can raise the cost.
• Vacant land is difficult to value and has a limited buyer pool, so lenders tend to treat it as higher risk.

Term

Private mortgages are usually written for a short term, often a year or so, with the expectation that the borrower will repay or refinance at the end. The length of the term, and whether interest-only payments are allowed, are set by each lender and affect the overall cost.

Credit and Borrower Profile

Private lenders rely less on credit scores than banks do, but your overall profile still matters. Lenders may look at:

• Payment history: evidence that you pay existing obligations reliably
• Income: even if it cannot be proven to bank standards, some evidence of income shows repayment ability
• Reason for borrowing: a clear purpose, such as consolidating debt, is easier to assess than an unclear one
• Legal issues: active lawsuits, liens on title or enforcement proceedings add risk and can raise the cost

Exit Strategy

Lenders want to know how the mortgage will be repaid at the end of the term. A clear, realistic exit strategy reduces the lender's risk. Common exit plans include refinancing with a bank or alternative lender, selling the property, or receiving a known future payment, such as sale proceeds.

First Mortgage vs. Second Mortgage

The position of the mortgage on title matters. A second mortgage ranks behind the first mortgage, so the first lender is paid first if the property is sold to recover a debt. That extra risk generally means a second mortgage costs more than a first mortgage on the same property, and lenders usually look at the combined loan-to-value of both mortgages together.

Private vs. B-Lender vs. Bank Financing

It helps to see where private mortgages sit relative to other lending tiers. A private mortgage is usually best understood as a temporary bridge to lower-cost financing, not a permanent solution.

Because private financing generally costs more than bank financing, private mortgages are designed as short-term solutions. Staying in one longer than needed can cost you money. A mortgage broker can help you build a plan to move to lower-cost financing when your situation allows.

Understanding the Total Cost of Borrowing

The interest rate alone does not show the full cost. To compare options, look at everything you will pay over the term. Depending on the deal, that can include:

• interest over the term
• a lender fee
• a brokerage fee
• legal fees, which may cover both your lawyer and the lender's
• an appraisal fee
• any other charges listed in the commitment letter, such as renewal, administration or early-repayment charges

Amounts differ by lender, lawyer and file, and some fees are deducted from the advance at closing, so the cash you receive can be less than the mortgage amount. Ask for every fee in writing, add them up, and compare the total cost across offers rather than looking at one component. For more detail, see our guide to private mortgage fees.

How to Strengthen Your File

You have more influence over your terms than you might think. These steps tend to help any lender assess your file:

1. Improve your equity position. Paying down existing debt or making a larger down payment lowers the loan-to-value.
2. Prepare a clear exit strategy. Show how you plan to move to conventional financing, with realistic timelines.
3. Organize your documentation. Even where income verification is flexible, bank statements, tax returns, contracts and invoices strengthen your file.
4. Consider the property. A property in a market with good comparable sales is generally easier for a lender to assess.
5. Work with a licensed brokerage. A brokerage with lender relationships and experience in private mortgage lending can present your file to suitable lenders. Outcomes depend on the file and on lender approval.

Market Conditions to Watch

Private mortgage pricing is influenced by several market factors, though no public source tracks it.

Bank of Canada Policy

The Bank of Canada's policy interest rate was 2.25% as of its September 2, 2026 announcement, with no change at that decision.1 Private mortgage pricing does not move in lockstep with the policy rate, but the broader interest rate environment can influence what lenders and their funding sources expect to earn. Check the Bank of Canada page for the current rate, since it changes with each announcement.

Housing Market Conditions

Property values affect loan-to-value. When values rise, the equity cushion grows. If values fall in a particular market, lenders may become more conservative about how much they will lend against a property there.

Any quote you receive today is a snapshot. The goal is to use the private mortgage strategically, address whatever prevented conventional approval, and move to lower-cost financing when you can. The plan matters as much as the rate.