Private mortgages in Ontario: what borrowers should know

Many Ontario borrowers hit the same wall: a bank says no, the deal has a deadline, and suddenly they need a solution that the traditional mortgage system simply cannot provide. Private mortgages exist precisely for that moment. But they're widely misunderstood, often misrepresented, and underutilized by borrowers who could genuinely benefit from them.

This guide covers everything you need to know about private mortgage lending in Ontario in 2026: how it works, who qualifies, what it costs, how it compares to your other options, and how to use it strategically, not as a last resort, but as the intelligent move it often is.

What Is a Private Mortgage in Ontario?

A private mortgage in Ontario is a loan secured against real estate that is funded by a non-bank lender. Private mortgage lenders include individual investors, mortgage syndicates, and licensed Mortgage Investment Corporations (MICs) like Richview Capital MIC. Unlike chartered banks or credit unions, private lenders are not bound by the federal mortgage stress test, rigid income-qualification formulas, or the same credit score thresholds that govern institutional lending.

The result is a lending environment built around the asset, the property, rather than the applicant's credit score or tax returns. Private lenders in Ontario underwrite based on the property's value, the loan-to-value (LTV) ratio, and the borrower's exit strategy. That flexibility is exactly why private mortgage lending has become a critical part of Ontario's real estate financing ecosystem.

Private mortgages in Ontario are regularly used for:

• Purchases where bank approval was declined or delayed
• Debt consolidation using home equity
• Bridge financing between buy and sell transactions
• Construction financing and custom home builds
• Refinancing when institutional lenders can't move fast enough
• Second mortgages to access equity without breaking a first mortgage
• Avoiding power of sale or foreclosure
• Tax arrears and CRA debt resolution

Private Mortgage vs. Bank Mortgage in Ontario: The Core Differences

Most Ontario borrowers have only ever dealt with a bank or credit union for mortgage financing. Understanding what makes private lending genuinely different is essential before deciding whether it's right for your situation.

The key trade-off is cost for speed and flexibility. Private mortgage rates in Ontario are higher than bank rates because private lenders take on risk that banks are regulated against. That cost is the price of access, and for many borrowers, it is an entirely rational trade.

“A private mortgage is not a failure. It’s a tool. Used correctly, it bridges you from where you are to where the bank will eventually take you.”

Who Qualifies for a Private Mortgage in Ontario?

Private mortgage approval in Ontario is less about who you are on paper and more about the real estate asset you're borrowing against. That said, there are clear borrower profiles that most commonly use private lending, and understanding where you fit helps set realistic expectations going in.

Self-Employed Borrowers

Ontario's self-employed population has grown significantly over the past decade. Many business owners who are financially strong struggle with bank qualification because their T4 income doesn't reflect their actual earnings or net worth. A private lender evaluates the full picture: the property, the equity position, and a realistic plan to service or exit the loan. If you write off significant business expenses, a private mortgage in Ontario may be your most direct path to financing.

Borrowers with Bruised or Limited Credit

Past credit events, missed payments, consumer proposals, or discharged bankruptcies, don't automatically disqualify you from a private mortgage in Ontario. Private lenders are focused on whether the property provides adequate security and whether there is a credible exit strategy. A borrower with a strong equity position but a past credit event is a common and well-suited private lending candidate.

New Canadians and Newcomers

Establishing Canadian credit history takes time. Newcomers with strong financial backgrounds but limited credit history in Canada often find private lenders far more accessible than institutional lenders who rely on bureau scores built over years. If you're new to Canada and looking to purchase real estate in the GTA or broader Ontario market, a private mortgage can provide access while your Canadian credit profile develops.

Real Estate Investors

Investors who hold multiple properties often hit debt-service ratio limits at banks after three or four properties. Private financing, particularly second mortgages, bridge loans, and construction loans, allows experienced investors to keep moving without waiting for bank approval timelines or restructuring their entire portfolio.

Borrowers in Time-Sensitive Situations

Bridge financing is one of the most common uses of private mortgages in the GTA. When you've bought a new property before your existing home sells, or when you need to close in days to secure a deal, a private lender operating with 24–48 hour approvals is often the only viable path. Missing a closing date because of a slow institutional approval costs far more than private mortgage interest.

Borrowers Facing Power of Sale or Foreclosure

If you're behind on mortgage payments and facing power of sale, a private mortgage in Ontario can provide the capital to bring arrears current, stop the power of sale process, and preserve your equity while you stabilize your financial situation. Speed matters enormously here. A private lender that can act within 24–48 hours can be the difference between keeping and losing the property.

Private Mortgage Rates in Ontario: What to Expect in 2026

Private mortgage rates in Ontario are always higher than bank rates. This is not arbitrary. It reflects the risk profile of the borrower, the position in the capital stack, the property type, and the term length. In 2026, borrowers accessing private first mortgages through licensed MICs in Ontario can expect rates generally starting from approximately 6.99% for well-positioned deals, with most transactions landing in the 8–13% range depending on deal structure.

Second mortgages carry higher rates than firsts, often in the 10–15%+ range, because the second-position lender takes on additional risk in the event of default. Bridge financing rates depend heavily on the speed required and the term length.

In addition to interest, private mortgages in Ontario typically carry:

• Lender fee: typically 1–3% of the loan amount
• Broker fee: if a mortgage broker is involved
• Legal fees: both lender and borrower retain independent counsel
• Appraisal fee: a current certified appraisal is standard
• Discharge fee: if an existing mortgage is being replaced

Understanding the total cost of borrowing, not just the interest rate, is essential when evaluating a private mortgage. At Richview Capital, we provide a full written cost disclosure before you commit to anything.

What makes private mortgage costs justifiable for many Ontario borrowers is the opportunity cost comparison. Losing a real estate deal worth hundreds of thousands of dollars in equity because of a three-week bank approval delay is far more expensive than six months of private mortgage interest. The math almost always favours moving.

What Is the Mortgage Stress Test, and Why Doesn't It Apply to Private Lenders?

The federal mortgage stress test requires Canadian borrowers to qualify at the greater of their contract rate plus 2%, or 5.25%. This means a borrower taking a mortgage at 4.5% must prove they can afford payments at 6.5%. This significantly reduces the amount they can borrow.

For many otherwise-qualified Ontario homeowners, the stress test is the single barrier between them and a bank approval. If you are self-employed with fluctuating income, recently changed jobs, or carry existing debt, the stress test threshold alone can result in a decline even when you have strong equity and a solid financial picture.

Private lenders in Ontario, including licensed MICs like Richview Capital, are not subject to the federal stress test. Approval is based on the property, the LTV, and your ability to service the loan. This makes private lending the natural next conversation for any borrower who has been stress-tested out of a bank approval.

Second Mortgages in Ontario: Accessing Equity Without Breaking Your First

A second mortgage in Ontario is a loan secured against your property in second position, meaning your existing first mortgage lender has priority in the event of default. Second mortgages allow homeowners to access accumulated equity without breaking their existing mortgage, which could trigger a significant prepayment penalty, particularly on fixed-rate terms.

Common uses for a second mortgage through a private lender in Ontario include:

• Debt consolidation: replacing high-interest credit card debt, lines of credit, or personal loans with lower-cost secured financing
• Home renovations: funding major renovations that increase the property's value
• Investment capital: using existing real estate equity to fund a down payment on an investment property
• CRA and tax arrears: addressing Canada Revenue Agency liabilities quickly with secured financing
• Business working capital: self-employed borrowers using home equity as business capital
• Avoiding power of sale: bringing a first mortgage current to stop enforcement proceedings

At Richview Capital, second mortgages are evaluated on the combined LTV across both first and second mortgage positions, the property's current market value, and the borrower's ability to service the debt or execute a clear repayment plan. We lend up to 75% combined LTV on residential properties.

Bridge Financing in Ontario: Closing the Gap Between Buy and Sell

Bridge financing in Ontario is a short-term private mortgage used to cover the gap between closing on a new property purchase and receiving the proceeds from a property sale. It is one of the most common and time-sensitive applications of private lending in the GTA.

Bridge loans are typically required when:

• Your new property closes before the sale of your existing home
• You need to demonstrate closing funds to your real estate lawyer before your sale proceeds clear
• Your bank won't advance bridge financing because the sale isn't "firm" enough
• The timing gap is too short for a bank to process a standard approval

At Richview Capital, bridge financing starts from 8.99%. Approvals come within 24–48 hours when documentation is in order. In many cases we have closed bridge financing same-day when the timeline demanded it.

Key Qualifying Factors for a Private Mortgage in Ontario

When Richview Capital evaluates a private mortgage application, here is what we focus on:

• Property type and location: Residential properties in established Ontario markets, the GTA, Vaughan, Woodbridge, Hamilton, Ottawa, Waterloo Region, are preferred. Rural or specialty properties may face higher rates or lower LTV offers.
• Loan-to-value ratio: We lend up to 75% LTV on residential first mortgages. Second mortgages are evaluated on the combined LTV position.
• Exit strategy: How will the loan be repaid or refinanced? A clear, credible exit, transitioning to a bank at renewal, selling the property, is essential.
• Equity position: The more equity in the property, the stronger the application. Private lenders are protecting their position as secured creditors.
• Property appraisal: A current certified appraisal from a qualified Ontario appraiser confirms market value and anchors the LTV calculation.
• Title search: A clean title search confirms there are no unexpected liens or encumbrances on the property.

How to Choose a Private Mortgage Lender in Ontario

Not all private lenders in Ontario operate with the same standards of transparency, licensing, or professional governance. With private lending growing significantly across the GTA and Ontario, it's essential to work with lenders who are properly licensed, regulated, and accountable.

Look for a Licensed and Regulated Structure

Legitimate private lenders in Ontario include licensed MICs, registered mortgage administrators, and brokerages operating under FSRA oversight. Richview Capital holds Mortgage Administrator License #13171, is an ONMICA member, and operates under clear regulatory frameworks with professional governance requirements. Ask any private lender for their license number and verify it directly with FSRA.

Demand Transparent Fee Disclosure

Any reputable private lender will provide a clear cost-of-borrowing breakdown before you commit. This includes the interest rate, lender fees, any renewal or extension structures, and prepayment terms. If a lender is vague or evasive about fees, that is a serious warning sign.

Insist on Direct Access to Decision-Makers

One of the defining advantages of a quality private lender over a large institution is direct communication. You should be able to speak with the people actually making lending decisions. At Richview Capital, borrowers communicate directly with our underwriting team throughout the entire process.

Prioritize Experience in Ontario Real Estate Markets

Ontario's real estate markets have specific characteristics that matter enormously in underwriting. The GTA, Vaughan and Woodbridge corridors, Ottawa's distinct dynamics, Hamilton's evolving landscape. Each requires regional knowledge. A private lender with genuine decades of Ontario market experience makes faster, better decisions than one applying a generic national framework to your deal.

The Private Mortgage Process: Application to Funding at Richview Capital

One of the most common misconceptions about private mortgages in Ontario is that the process is informal or murky. At Richview Capital, we follow a clear and structured process:

1. Initial consultation: A direct conversation with our team about your financing need, property details, and timeline. Your situation gets evaluated holistically, not run through an automated system.
2. Application and documentation: Property details, current mortgage information, identification, and any relevant financial documentation. Our requirements are lighter than institutional lending, but accuracy matters.
3. Underwriting and approval: We review the property, LTV position, exit strategy, and overall risk profile. Initial decisions at Richview Capital come within 24–48 hours.
4. Commitment letter: A formal commitment letter outlining loan terms, rate, fees, and conditions. No verbal promises.
5. Legal process: Both borrower and lender engage independent legal counsel to review and register the mortgage on title. This protects all parties and is non-negotiable.
6. Funding: Funds are advanced and the mortgage is registered on title. Total timelines depend on the complexity of the deal and how quickly documentation is assembled.

Private Mortgage FAQ: Common Questions from Ontario Borrowers

Can I get a private mortgage with bad credit in Ontario?

Yes. Private mortgage lenders in Ontario evaluate applications primarily based on the property's value and equity position, not credit score alone. Borrowers with past bankruptcies, consumer proposals, or bruised credit are common applicants for private lending. The key factors are sufficient equity in the property and a credible exit strategy.

How fast can a private mortgage close in Ontario?

Initial decisions at Richview Capital come within 24–48 hours of receiving a complete application. Actual funding timelines depend on how quickly all documentation is assembled, legal review is completed, and the appraisal is received. Deals with all documentation ready can move very quickly, we have funded same-day in genuinely urgent situations.

What is the maximum LTV for a private mortgage in Ontario?

At Richview Capital, we lend up to 75% LTV on residential first mortgages. For second mortgages, we evaluate the combined LTV across both positions. Construction financing LTV is calculated against the as-complete appraised value of the property.

Are private mortgage lenders regulated in Ontario?

Yes. Licensed MICs and mortgage administrators in Ontario are regulated by FSRA (Financial Services Regulatory Authority of Ontario). Richview Capital holds Mortgage Administrator Licence #13171 and is a member of the Ontario Mortgage Investment Companies Association (ONMICA). Always verify a lender's licence with FSRA before proceeding with any application.

What is the difference between a private mortgage and a B-lender mortgage?

B-lenders (also called alternative lenders or trust companies) sit between the big banks and private lenders. They have more flexibility than Schedule A banks but still use income verification, credit scores, and modified stress tests. Private lenders are entirely equity-based and have the fewest qualification requirements of any tier, at the cost of higher rates. If you've been declined by both A and B lenders, a private mortgage is the natural next step.

How long can I keep a private mortgage?

Private mortgages in Ontario are typically short-term: 6 months to 2 years. They are designed as bridge solutions, not long-term financing. The goal is always to transition to conventional or B-lender financing at renewal. That transition should be planned before you sign, not figured out at renewal time.

Private Mortgages as a Strategic Tool, Not a Last Resort

The most sophisticated real estate investors and financial planners in Ontario have long understood that private mortgage financing is a strategic tool, not a fallback when banks decline. The ability to move fast, access equity, bridge timing gaps, and close construction financing without institutional bureaucracy creates genuine competitive advantage in Ontario's real estate market.

Used with a clear exit strategy and a realistic plan to transition to lower-cost institutional financing when the time is right, a private mortgage can be one of the smartest financial moves a property owner or investor makes.

“In over fifteen years in private lending, the borrowers who succeed with private financing are the ones who treat it as a bridge, not a destination. Know your exit before you sign.”

— Richview Capital MIC

If you're exploring private mortgage options in Ontario, whether in the GTA, Vaughan, Woodbridge, Hamilton, Ottawa, or anywhere across the province, Richview Capital's team brings decades of direct experience, licensed regulatory standing, and a case-by-case approach that puts your situation at the centre of every decision. We provide same-day feedback on every application.

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Richview Capital MIC is a licensed Mortgage Investment Corporation (Mortgage Administrator License #13171) and a member of ONMICA. For more on our firm, see About.