A private mortgage rarely costs what the headline rate suggests. Between the lender fee, the broker fee, legal costs on both sides, and an appraisal, borrowers routinely pay 3% to 6% of the loan amount before a single interest payment is due — on top of an interest rate that’s already 2 to 3 times a bank’s. If you’re comparing a private mortgage against refinancing or stopping a power of sale in Ontario, understanding the all-in cost, not just the rate on the lender’s rate sheet, is the difference between a smart bridge loan and a decision you regret in twelve months.
This guide breaks down every component of a private mortgage’s true cost in Ontario for 2026, compares it against B-lenders and banks, and shows a full worked example so you can calculate your own numbers before you sign a commitment letter.
A private mortgage in Ontario typically costs 8%–15% in annual interest, plus one-time fees of 3%–6% of the loan amount (lender fee, broker fee, legal, appraisal, title insurance). On a $200,000 one-year private second mortgage at 10% interest-only, expect roughly $20,000 in interest and $8,000–$12,000 in upfront fees — pushing your effective annual cost closer to 14%–16% once fees are factored in. Because private loans are interest-only, none of that goes toward your principal.
Private Mortgage Rates in Ontario, 2026
Rate depends primarily on loan-to-value (LTV), mortgage position, property location, and how quickly you need to close. Here’s where the market sits as of September 2026:
| Mortgage Type | Rate Range | Typical Rate |
|---|---|---|
| Private first mortgage (urban, LTV under 65%) | 6.5%-9.5% | 8% |
| Private first mortgage (rural / higher LTV) | 9.5%-12% | 10.5% |
| Private second mortgage (urban) | 8.5%-12.5% | 10.5% |
| Private second mortgage (rural / higher LTV) | 11%-15% | 13% |
| Bridge loan (short-term, sale pending) | 8%-12% | 9.5% |
| Construction / development | 10%-14% | 12% |
How Loan-to-Value Drives Your Rate
| LTV Range | Rate Impact |
|---|---|
| Under 50% | Lowest available rates |
| 50%-65% | Mid-range pricing |
| 65%-75% | Noticeably higher |
| 75%-80% | Highest rates most lenders will offer |
For context, the big banks’ prime rate sits at 4.45% and the Bank of Canada’s overnight rate is 2.25% as of its September 2026 announcement — the gap between that and an 8%–15% private rate is what you’re paying for speed, flexibility, and lending to borrowers a bank has declined.
Every Fee Explained
The interest rate is only half the story. Here’s what else shows up on your closing statement, and who it goes to.
| Fee | Typical Range | Paid To | When |
|---|---|---|---|
| Lender fee | 1%-4% of loan amount | Private lender | Deducted from advance at closing |
| Broker fee | 0%-2% of loan amount | Mortgage broker/brokerage | Deducted from advance (sometimes paid by lender instead) |
| Legal fees — your lawyer | $1,500-$2,000 | Your real estate lawyer | At closing |
| Legal fees — lender's lawyer | $1,200-$1,800 | Lender's lawyer (billed to you) | At closing |
| Appraisal | $350-$600 | Appraiser | Before closing |
| Title insurance | $250-$450 | Title insurer | At closing |
| Administration/registration | $200-$350 | Lender/lawyer | At closing |
| Renewal fee (if extended) | 0%-3% of balance | Lender | At renewal |
| Discharge/exit fee | $0-$300 | Lender | At payout |
Ontario’s Mortgage Brokerages, Lenders and Administrators Act, 2006 and its accompanying Cost of Borrowing regulation (O. Reg. 191/08) legally require every one of these charges to be disclosed to you in plain language before you sign — as an all-in Annual Percentage Rate (APR), not just the headline interest rate. If a broker or lender won’t show you that number in writing, that alone is a reason to walk away.
Real Example: Full Cost Breakdown
Here’s a complete, worked example on a $200,000 private second mortgage at 10%, one-year term, interest-only:
| Cost Component | Amount |
|---|---|
| Lender fee (2%) | $4,000 |
| Broker fee (1.5%) | $3,000 |
| Legal — your lawyer | $1,500 |
| Legal — lender's lawyer | $1,300 |
| Appraisal | $450 |
| Title insurance | $300 |
| Total upfront fees | $10,550 |
| Monthly interest-only payment | $1,667 |
| Annual interest cost | $20,000 |
| True 12-month cost (fees + interest) | $30,550 |
That $30,550 works out to an effective annual cost of roughly 15.3% — well above the 10% quoted rate — because the fees are a one-time hit on top of interest that never reduces the $200,000 you still owe at renewal.
Want your own numbers? Use our private mortgage cost calculator to plug in your loan amount, rate, and fee structure before you commit.
Private vs. B-Lender vs. Bank: Side-by-Side
| Factor | A-Lender (Bank/Credit Union) | B-Lender (Alternative) | Private Lender |
|---|---|---|---|
| Typical rate | 4.45%-6% | 5.5%-8% | 8%-15% |
| Upfront fees | 0%-1% | 0.5%-1.5% | 3%-6% |
| Credit minimum | 680+ | 550-650 | No minimum (equity-based) |
| Income documentation | Full documentation | Flexible/stated income | Often not required |
| Max LTV | Up to 95% (insured) | Up to 80% | Typically up to 75%-80% |
| Approval speed | 1-3 weeks | 3-7 days | 24 hours-7 days |
| Typical term | 1-5 years | 1-3 years | 6-24 months |
If your credit and income can support it, refinancing with a bank or B-lender will almost always be cheaper than private financing over a full year — private mortgages earn their cost by approving deals that traditional lenders won’t, not by competing on price.
Individual Investor vs. MIC vs. Syndicated Mortgage
Not all “private mortgages” come from the same kind of lender, and the structure affects both your rate and your risk if something goes wrong mid-term.
| Feature | Individual Investor | Mortgage Investment Corporation (MIC) | Syndicated Mortgage |
|---|---|---|---|
| Who funds the loan | One private individual | Pooled fund of investors | Multiple investors, one deal |
| Regulator | FSRA (via licensed broker) | FSRA + Ontario Securities Commission | FSRA + OSC |
| Typical rate | 10%-15% | 8%-12% | 9%-14% |
| Flexibility on terms | High — negotiable directly | Moderate — set lending policies | Low — complex structure |
| Funding speed | Fastest | Moderate (1-2 weeks) | Slowest |
| Renewal risk | Higher — a single decision-maker can decline to renew | Lower — institutional continuity | Variable |
Why Private Mortgage Costs Are Rising in 2026
Private lending isn’t a niche corner of the market anymore. According to FSRA, the dollar value of private mortgages arranged by licensed Ontario brokers grew 72% between 2019 and 2021 alone, and that growth has continued as roughly 1.15 million Canadian mortgages come up for renewal in 2026 at meaningfully higher rates than they were originally set at. More demand for private capital, combined with lenders pricing in more risk during a period of rising mortgage arrears, is keeping private rates elevated even as the Bank of Canada’s benchmark rate sits well below where it was in 2023–2024.
Red Flags: What FSRA Wants You to Know
Ontario’s mortgage regulator has flagged private lending as an area where borrowers are especially likely to misunderstand what they’re signing. In FSRA-commissioned polling, 54% of homeowners incorrectly believed their private mortgage payments were reducing the principal, when in most cases they’re interest-only. FSRA has also disciplined brokers for failing to disclose the true, all-in cost of borrowing on high-cost private deals — in one enforcement case, a loan advertised as short-term financing carried a disclosed annual cost of borrowing over 140% once fees were included.
Before you sign anything, confirm:
- Your broker and lender are both licensed with FSRA — you can verify a license on the FSRA public register.
- You’ve received a written cost-of-borrowing disclosure showing the APR, not just the interest rate.
- You understand this is interest-only unless explicitly stated otherwise.
- You have a realistic exit strategy — FSRA’s own research found 80% of borrowers agree an exit plan is important, yet many don’t have one in writing before they close.
How to Lower Your Private Mortgage Cost
- Shop more than one lender. Rate and fees both vary meaningfully between private lenders for the same LTV and property.
- Negotiate the broker fee. Some brokers are compensated by the lender instead of charging you directly — always ask.
- Borrow only what you need. Fees are calculated on the loan amount, so a smaller loan reduces both the upfront cost and monthly interest.
- Confirm there’s no prepayment penalty if you expect to refinance out early.
- Have your refinance plan ready before you close, not after — if you’re using a private mortgage to stop a power of sale in Ontario, line up your exit lender in parallel so the private term doesn’t quietly roll into a second expensive renewal.
Frequently Asked Questions
Are private mortgage payments interest-only?
Usually, yes. Most private mortgages in Ontario require interest-only payments, meaning your balance doesn’t shrink during the term — you’ll need to refinance, sell, or pay a lump sum at maturity.
What's a normal private mortgage term length?
Typically 6 to 24 months. Private mortgages are designed as short-term bridge financing, not a long-term replacement for a bank mortgage.
Do private mortgages require a credit check?
Most private lenders focus on the equity in the property rather than credit score, so approval is possible with damaged credit, self-employment income, or CRA arrears — though some lenders still review credit as one factor among several.
Is the broker fee always charged to the borrower?
Not always. Many brokers are compensated directly by the lender (a “finder’s fee”), which means it costs the borrower nothing extra — but this must be disclosed either way under Ontario’s cost-of-borrowing rules.
How is the APR different from the interest rate?
The interest rate reflects only the stated annual rate. The APR folds in the lender fee, broker fee, and other mandatory charges to show your true annual cost — always ask for the APR figure, not just the rate.
Get an Accurate, All-In Quote Before You Sign
Every private mortgage is priced individually based on your property, equity, and timeline. If you’re weighing a private mortgage against refinancing, selling, or stopping a power of sale, the fastest way to know your real numbers is to get a written cost-of-borrowing disclosure and compare it side by side with your other options.
Get a free private mortgage quote and APR breakdown → Compare refinancing options in Ontario → Read our guide: Power of Sale Ontario — 5 Ways to Stop It →
About the Author
Faizal Garasia is a licensed mortgage broker (FSRA Lic. #10557) with over 15+ of experience arranging private, alternative, and traditional mortgage financing across Ontario. She specializes in helping homeowners in arrears, self-employed borrowers, and clients facing power of sale compare their financing options side by side.