Private mortgage rates in Ontario: what a private mortgage really costs in 2026
If you have been quoted a private mortgage rate recently, your first reaction was probably some version of "that is more than double what my bank charges." You are right, and there is a logic behind it. The problem is that most pages about private mortgage rates in Ontario either hide the numbers behind "rates vary" or quote a headline rate that ignores the fees, which is where much of the real cost sits.
This guide puts the numbers on the table. It covers what private mortgage rates in Ontario actually look like in 2026, every fee you should expect, how lenders set pricing, how to compare two competing offers properly, and the warning signs that a quote has crossed from expensive into unreasonable. If you are still deciding whether this type of financing fits your situation at all, start with our plain-language guide to how private mortgages work in Ontario, then come back here for the cost side.
Private lending is not a fringe market. According to the Financial Services Regulatory Authority of Ontario (FSRA), private lenders funded 65,233 residential mortgages in Ontario in 2024, worth $32.0 billion. That is 15.8 percent of all mortgage transactions in the province by count and 12.5 percent by dollar value. Tens of thousands of Ontario borrowers price this product every year, and the ones who do it well approach it the same way: total cost, not headline rate.
Private mortgage rates in Ontario in 2026
Some context first. The Bank of Canada held its policy rate at 2.25 percent in July 2026, which keeps bank prime around 4.45 percent and typical bank mortgage rates in the 4 to 5 percent range for well-qualified borrowers. Private mortgage rates sit well above that, because private lenders take the deals banks decline and price for that risk.
There is no posted rate sheet for private lending, but the Ontario market tends to cluster in recognizable bands. As of 2026, typical ranges look like this:
| Mortgage type | Typical rate range | Typical loan-to-value |
|---|---|---|
| Private first mortgage | 7 to 10 percent | Up to 75 percent |
| Private second mortgage | 9 to 14 percent | Up to 80 percent combined |
| Higher-risk files (rural property, high LTV, construction, weak exit) | 12 percent and up | Case by case |
Treat these as orientation, not a quote. A borrower with a strong property in a major urban market at 55 percent loan-to-value can land near the bottom of the range. A high-LTV second mortgage on a rural property will not.
Two structural points matter as much as the rate itself. First, terms are short, usually 6 to 24 months, with one year being the most common. You are not signing up for this rate for 25 years. Second, most private mortgages are interest-only. On a $300,000 private first mortgage at 8.5 percent, that means monthly payments of $2,125, with the full $300,000 still owing at the end of the term. Interest-only payments keep monthly cash flow manageable, but they also mean the loan does not shrink, which is why every private mortgage needs an exit plan, whether that is a sale, a refinance with a bank, or completed renovations that change how a lender views the property.
If your file involves a lender in second position behind your existing bank mortgage, the pricing dynamics are specific enough that we cover them separately in our guide to getting a second mortgage in Ontario.
Private mortgage fees: what you pay beyond the interest rate
The rate is only part of the price. On a 12-month term, fees often account for a quarter to a third of the total cost of borrowing. Here is the full list, with typical Ontario ranges.
| Fee | Who charges it | Typical range | On a $100,000 loan |
|---|---|---|---|
| Lender fee | The lender | 1 to 3 percent of the loan | $1,000 to $3,000 |
| Broker fee | Your mortgage brokerage | 1 to 2 percent of the loan | $1,000 to $2,000 |
| Lender's legal fees | Paid by you, to lender's counsel | $1,500 to $2,500 | $1,500 to $2,500 |
| Your own legal fees | Your real estate lawyer | $1,000 to $2,000 | $1,000 to $2,000 |
| Appraisal | Appraisal firm | $350 to $600 (more for rural or complex properties) | $350 to $600 |
| Title insurance and registration | Through your lawyer | $250 to $500 | $250 to $500 |
| Renewal or extension fee (if you stay past the term) | The lender | Often 1 to 2 percent | $1,000 to $2,000 |
| Discharge and administration fees | The lender | $300 to $700 | $300 to $700 |
A few notes on the big ones.
Lender fee. This is the lender's compensation for underwriting, funding, and administering a short-term, higher-risk loan. It is usually deducted from the mortgage advance, so a $100,000 mortgage with a 2 percent lender fee puts about $98,000 in your hands while interest accrues on the full $100,000. Always ask whether quoted fees are deducted from the advance or added to the balance.
Broker fee. On bank mortgages, the lender pays the broker. On private deals, the borrower usually pays the brokerage directly, because private lenders do not pay the finder's fees banks do. A broker fee of 1 to 2 percent is normal for a standard residential file. Very small loans sometimes carry higher percentage fees because there is a floor on what a file is worth doing, but the fee must always be disclosed in writing before closing.
Legal costs run twice. You pay your own lawyer and, on most private deals, the lender's legal costs too. Independent legal advice is not a formality worth skipping. Your lawyer is the person who confirms the registered mortgage matches the commitment you signed.
Renewal fees are the quiet cost. If your exit plan slips and you need another year, many lenders charge a renewal fee of 1 to 2 percent to extend. Two renewals can add as much cost as the original setup. Pricing a private mortgage honestly means pricing the possibility that you hold it longer than 12 months.
Who is on the other side of these deals varies: individual investors, syndicates, and structured lenders such as mortgage investment corporations. If you are curious how pooled private lenders operate and why their pricing tends to be more standardized than an individual investor's, see our explainer on what a mortgage investment corporation (MIC) is.
How private lenders set your rate
Two neighbours can call the same lender in the same week and get quotes four points apart. That is not arbitrary. Private pricing is driven by the security, not the borrower's paperwork.
Loan-to-value is the biggest driver. LTV is the mortgage total divided by the property value. At 50 percent LTV, the lender has a large equity cushion if things go wrong, and pricing reflects that. Push combined LTV toward 75 or 80 percent and the cushion thins, so both the rate and the lender fee climb. Dropping your request by even 5 points of LTV is often the single most effective way to improve a quote.
Position matters. A second mortgage ranks behind the first, meaning the first lender gets paid in full before the second sees anything in a default. That subordination is why second mortgage money costs 2 to 4 points more than first mortgage money on the same property.
Property and location. A detached house in Toronto or Ottawa is easy to value and easy to sell. A rural property, a farm with outbuildings, raw land, or a half-finished construction project is harder on both counts, and pricing widens accordingly.
Exit strategy. Lenders price the question "how does this loan get repaid in 12 months?" A clear exit, such as a scheduled sale or a realistic bank refinance, earns better terms than "we will figure it out."
Borrower profile matters less than you expect. Credit score and provable income, which dominate bank underwriting, are secondary here. That is precisely why private lending exists for borrowers the banks decline, a group we cover in our guide to mortgage options for borrowers with damaged credit. Weak credit does not disqualify you, but combined with high LTV it will push pricing up.
What a private mortgage costs all-in: a worked example
Suppose a homeowner in Mississauga borrows $100,000 as a private second mortgage to clear tax arrears and consolidate cards. The quote: 11 percent interest, interest-only, 12-month term, 2 percent lender fee, and a broker fee of 1 percent subject to a $1,500 brokerage minimum, which applies here because the loan is small.
| Item | Cost |
|---|---|
| Interest ($100,000 x 11 percent x 1 year) | $11,000 |
| Lender fee (2 percent) | $2,000 |
| Broker fee ($1,500 brokerage minimum) | $1,500 |
| Legal fees (both sides) | $2,800 |
| Appraisal | $450 |
| Title insurance and registration | $350 |
| Total first-year cost | $18,100 |
The monthly payment is about $917. The all-in first-year cost is $18,100 on $100,000 borrowed, an effective cost of borrowing around 18 percent even though the quoted rate was 11 percent. And because the lender fee is deducted from the advance, the borrower nets roughly $93,000 to $94,000 after fees and legal costs.
That effective-cost gap between 11 and 18 percent is the whole argument for pricing on total cost. It is also why a private mortgage only makes sense with a defined purpose and a defined exit: stopping a power of sale, closing a purchase on deadline, funding a renovation that adds value, or consolidating high-interest debt into a mortgage at a rate far below credit card interest.
How to compare private mortgage offers
Use APR, not the headline rate
The annual percentage rate folds the mandatory fees into the interest rate to produce one comparable number, and Ontario law requires it to be disclosed to you before you sign. Insist on it, and check it. In a 2024 review of private mortgage files, FSRA found that only 35.5 percent of reviewed files had correct APR calculations, and just over half of the short-term files it examined had APRs above 35 percent, the current criminal threshold. The disclosure regime only protects you if the numbers in it are right, so have your lawyer verify the APR against the fee list.
A two-offer comparison
Suppose a borrower needs a $200,000 private first mortgage for one year and receives two quotes:
- Offer A: 8 percent rate, 3 percent lender fee, $500 administration fee
- Offer B: 9.5 percent rate, 1 percent lender fee, no administration fee
Offer A costs $16,000 in interest plus $6,500 in fees, a total of $22,500. Offer B costs $19,000 in interest plus $2,000 in fees, a total of $21,000. The offer with the higher headline rate is $1,500 cheaper over the term. Low-rate, high-fee structures usually favour the lender on short terms, because fees are charged up front no matter how long you keep the loan. If you expect to exit early, fees matter even more, since interest stops when you discharge but fees are already spent.
Questions to ask before you sign
- What is the APR, in writing, with every fee itemized?
- Is the lender fee deducted from the advance or added to the balance?
- What are the renewal fee and renewal rate if I need a second year?
- Is the mortgage open, or is there a prepayment penalty if I exit early?
- What are the discharge fee and any per-item administration charges?
- Who is the lender of record, and is the brokerage licensed?
Red flags in private mortgage pricing
Expensive is normal in this market. The following are not.
- An APR at or above 35 percent. Since January 1, 2025, the criminal rate of interest under the federal Criminal Code is 35 percent APR, calculated to include most fees and charges, not just interest. A structure that lands above that line is illegal, not merely aggressive.
- No licence. In Ontario, mortgage deals must generally be arranged through a brokerage licensed under the Mortgage Brokerages, Lenders and Administrators Act. Check the brokerage and agent on FSRA's public registry before you send documents to anyone.
- Fees that appear at the signing table. Ontario disclosure rules exist so that costs are documented before closing, not discovered at it. New fees at the lawyer's office are a reason to pause, not to push through.
- Pressure to skip independent legal advice, or a suggestion that the lender's lawyer can "handle both sides."
- No commitment letter, or a commitment that leaves the renewal fee, renewal rate, or discharge terms blank.
- Vague answers about the payout. You should know your exact per-diem interest and discharge figure mechanics before funding, because your exit depends on them.
FAQ: private mortgage rates and fees in Ontario
What is the average private mortgage rate in Ontario in 2026?
Most private first mortgages in Ontario are priced between 7 and 10 percent, and most second mortgages between 9 and 14 percent, depending on loan-to-value, property, and exit strategy. That compares with bank rates around 4 to 5 percent with the Bank of Canada policy rate at 2.25 percent.
How much are private mortgage fees in total?
Budget roughly 3 to 6 percent of the loan amount in first-year fees: a lender fee of 1 to 3 percent, a broker fee of 1 to 2 percent, plus legal, appraisal, and registration costs that typically total $3,000 to $5,000 on a standard residential file.
Why do I pay the broker on a private mortgage?
Private lenders generally do not pay brokers the finder's fees that banks do, so the borrower pays the brokerage directly, usually 1 to 2 percent of the loan. The fee must be disclosed in writing before closing under Ontario's mortgage brokering rules.
What does it cost to renew a private mortgage?
Many lenders charge a renewal or extension fee of 1 to 2 percent of the balance to extend the term, sometimes with a rate adjustment. If your exit plan may take longer than a year, ask for the renewal fee and renewal rate in the commitment letter before you sign.
Is private mortgage interest tax deductible?
Only when the borrowed money is used to earn income, such as funding a rental property or a business, under the same interest-deductibility rules as any loan. Interest on a private mortgage used for personal purposes is generally not deductible, and you should confirm your situation with an accountant.
Can I negotiate private mortgage rates and fees?
Yes, within limits. Lender fees, broker fees, and renewal terms are all negotiable, and lowering your requested loan-to-value is the strongest lever on rate. Competing written quotes, compared on APR, give you the most leverage.
Talk to a lender that prices in the open
Richview Capital is a Canadian mortgage investment corporation (MIC) that connects investors with secured, real-estate-backed lending opportunities and provides alternative mortgage financing. Because we lend from a managed pool rather than deal by deal, our pricing follows the fundamentals covered in this article: loan-to-value, position, property, and exit strategy, disclosed up front.
If you are weighing a private mortgage in Ontario, the most useful next step is a real quote you can hold up against the numbers on this page: rate, lender fee, and terms in writing, with the APR done properly. Contact Richview Capital to talk through your scenario and get a clear picture of what your file would cost, before you commit to anything.
Next steps: Borrowers · Speak With Our Team · FAQ
Richview Capital MIC is a licensed Mortgage Investment Corporation (Mortgage Administrator License #13171). This article is educational information for Ontario homeowners, not legal, financial, or tax advice. Rates, fees, LTV limits, and approvals vary by file and underwriting, and published ranges are subject to change and are not an offer of credit.
