What is a private lender in Ontario?

A private lender in Ontario is an individual or company that provides mortgage loans outside of traditional banks and credit unions. They often offer faster approvals and more flexible criteria, making them a good option for those who don’t qualify for conventional mortgages.

How do private mortgage rates in Ontario compare to traditional rates?

Private mortgage rates in Ontario are typically higher than traditional mortgage rates because private lenders take on more risk. Rates vary based on loan-to-value ratios and borrower profiles but usually range from around 7% to 13%.

When should you consider a private mortgage?

Consider a private mortgage if you’ve been declined by traditional lenders, need quick financing, have non-traditional income, or own a unique property that banks won’t finance. Private lending can also help with short-term needs like bridging or debt consolidation.

How can I get better private mortgage rates in Ontario?

Work with an experienced mortgage broker, leverage your home equity, prepare thorough documentation, choose the right mortgage term, and maintain good communication with lenders to secure better private mortgage rates.

Are private lenders in Ontario regulated?

Yes, private lenders in Ontario must be licensed and regulated by the Financial Services Regulatory Authority of Ontario (FSRA). This ensures they follow rules that protect borrowers.

What are the risks of using a private mortgage?

Private mortgages often have higher interest rates and shorter terms, which can make repayment challenging. It’s important to watch for hidden fees and avoid predatory lenders by researching thoroughly.

Private Second Mortgage in Ontario: Before You Sign

3 hours ago

Last updated: October 21, 2025 • Author: Effortless Mortgage

Thinking about a private second mortgage in Ontario? Learn when it makes sense, how much you can borrow (borrowing room), real costs, and the exit plan—before you sign anything.

TL;DR: A private second mortgage in Ontario is a short-term tool that can help when banks say no—if your borrowing room (aka LTV), all-in cost, and exit plan make sense. Use it for 3–24 months, often with interest-only payments, then refinance to lower cost.

"When does a private second mortgage make sense in Ontario?"

Before deciding, get clear on the problems a private second can actually solve. These are common scenarios where the higher short-term cost can unlock a bigger financial win.

Self-employed / limited declared income: You’re solid but can’t show two full years yet.
Bruised / bad credit: A short bridge to stabilize, then refinance.
CRA arrears or high-interest balances: Consolidate to stop penalties and compounding.
Tight timelines (3–24 months): Bridge for closings, payouts, or cleanup before refi.

Basically, if the short-term cost unlocks a bigger financial win (qualify to refinance, avoid penalties, wipe high-interest debt), it can be worth it. If not, pass.

“How do I figure out my borrowing room (aka LTV) for a second mortgage?”

Your borrowing room is how much you can safely borrow based on today’s value and lender caps; lenders call this loan-to-value (LTV).

Quick formula: (First mortgage + Target second) ÷ Current home value = % of value used.
Typical cap: Many Ontario private second lenders cap totals near 75–85% of value.
Stay inside the cap: Location, property type, and condition also affect the decision.

“Can you show me the math with real numbers?”

Here’s a quick example so you can sanity-check your own file. We’ll still run your exact numbers including fees, appraisal and location impact.

Home value: $800,000
First mortgage: $550,000
80% of value: $640,000 max total
Room before fees: $640,000 − $550,000 = $90,000 (so ~$75,000 net after fees is realistic)

“What will my monthly payment look like on a private second?”

Most private seconds use interest-only payments to keep cash flow manageable during your short timeline. Exact payments depend on your approved rate, amount, and fee structure.

Interest-only = lower monthly outlay: You’re buying time while you fix the root issue.
Short term by design: Plan for 3–24 months, then refi out.
We’ll show the monthly number up front—no surprises.

“What are the real costs: rates, fees, and closing expenses in Ontario?”

Don’t judge by rate alone—look at the all-in cost against the benefit you’re getting. Here’s what typically appears on second-mortgage files in Ontario.

Rate (higher than A/B): Short-term + flexible underwriting comes at a premium. Learn more about private mortgage rates.
Fees: Lender and sometimes broker fees (often % of loan).
Third-party costs: Legal, appraisal, admin, title (varies by file).
Decision rule: If all-in cost < value of the problem solved (e.g., CRA penalties, 19–29% cards, a purchase at risk), it can be worth it.

“What’s the exit plan so I don’t get stuck paying private rates?”

If we can’t see the exit, we don’t take the loan. Your roadmap should be written down on day one.

Timeline: 3–24 months with specific review dates.
Credit rebuild & documents: Clear collections, file taxes, normalize income on paper.
Refinance target: Move to A or B lender as soon as ratios and credit allow.

Check out our blog: A Lenders vs B Lenders vs Private Mortgage Lenders

“Do you have a quick Ontario case study?”

Real-world examples make the steps concrete. Here’s a simple one that mirrors the video.

Profile: Self-employed, CRA arrears + card debt; home $800K, first $550K.
Second arranged: ~$70K net after fees; interest-only payments.
12-month cleanup: Paid CRA, rebuilt credit, filed taxes → refinanced to lower cost.

FAQ: (Ontario-specific)

Can I get a second mortgage in Ontario with bruised credit or after a bank decline?

Yes—private lenders are equity-first, so borrowing room and exit plan matter more than perfect credit.

How much can I borrow on a private second?

Many lenders cap total borrowing around 75–85% of current value. Use the quick formula, then we’ll confirm with appraisal/fees.

Are private second mortgages always interest-only?

Often, yes—interest-only keeps monthly cost lower during your short timeline. Some lenders allow principal + interest; we can always look into this for you.

What fees should I expect at closing?

Usually lender/broker fees (percent of loan, typically 1%) plus legal, appraisal, admin/title. We quote all-in so you can compare to the benefit.

How do I get out of a private second?

Follow the exit roadmap: fix credit items, file taxes, stabilize income/ratios, then refi to A/B as soon as you qualify.

Is a HELOC better than a private second?

If you qualify, a HELOC is cheaper. If you don’t (timing/credit/doc limits), a private second can bridge you until you do.

Will this affect selling my home?

You can sell; the second is paid out on closing like any mortgage. We’ll coordinate payout statements so there are no surprises.

Takeaway - Read This Before You Sign

If a private second mortgage is on the table, keep it simple and numbers-first. Use this as your quick gut-check before moving forward.

Short-term tool, not forever. Plan for 3–24 months, then refinance to cheaper money.
Start with your borrowing room. Confirm today’s value and cap (often 75–85% of value total) to see what’s realistically available.
Judge the all-in cost, not just the rate. Add rate + lender/broker fees + legal/appraisal/admin and compare to the benefit you’re getting (e.g., clearing CRA, 19–29% cards, saving a purchase).
Cash-flow sanity matters. Interest-only payments can buy time while you fix the root issue.
Exit plan on day one. Write the milestones (credit, taxes/docs, target ratios) and a refi date—no exit, no deal.
Location and property condition count. They influence lender appetite and caps as much as the math.
If the net doesn’t favour you, walk away. The right answer is sometimes “not now.”

Ready to Explore Your Options?

Contact Effortless Mortgage today to get connected with trusted private lenders Ontario homeowners rely on.

We have VIP relationships with over 90+ banks, b lenders and private mortgage lenders including our own in-house private lender with $0 broker fee.

Call us at 1-888-978-4984
Email info@effortlessmortgage.ca