If your bank turned you down and you’re now pricing out a private mortgage, the honest first question is simple: what’s this actually going to cost me? Here’s where private rates sit in Canada right now, what pushes them up or down, and how to read a rate quote without getting blindsided by the fees sitting underneath it.
Quick answer: In October 2026, private first mortgages in Canada typically run 7% to 11% interest-only, and private second mortgages run about 9% to 14%. Loan-to-value (LTV) sets most of the price. On top of the rate, expect a lender fee of 1% to 3% and a broker fee of 1% to 2%. That usually puts the real cost of a one-year loan at roughly 10% to 18% of the cash you receive, with a mid-range file often landing near 12% to 15%. The Bank of Canada’s policy rate is 2.25% and prime is 4.45%.
The Bank of Canada held its policy rate at 2.25% on September 2, 2026, keeping the Bank Rate at 2.5% and the deposit rate at 2.20%. That’s the seventh straight hold since the last cut in October 2025, and it puts the prime rate Canadian banks use for variable products at 4.45%.
That number matters even if you’re not getting a variable-rate private mortgage. Prime is the floor most lenders — bank, B-lender, and private — build their pricing on top of. When prime sits still, private rates tend to hold too, and 2026 has been a holding year: the policy rate has been unchanged since the last cut nearly a year ago, with the Bank now flagging tariff-driven inflation risk as the reason it isn’t cutting further.
Private mortgage rates by product
| Product | Typical rate (interest-only) |
Typical max LTV |
Typical term |
|---|---|---|---|
| Private first, urban, standard property, under 65% LTV | 7% – 9.5% | Up to 65% | 6–24 months |
| Private first, 65% to 80% LTV | 9.5% – 12% | 75% – 80% | 6–24 months |
| Private first, rural or hard-to-sell property | 10% – 13%+ | Often 65% – 70% |
6–24 months |
| Private second mortgage | 9% – 14% | Up to 85% combined |
6 months – 2 years |
| Construction or bridge financing | 8% – 14% | Draw-based | 6–18 months |
| Commercial private mortgage | Custom quote, usually 8%+ |
Up to 75% | 1–3 years |
Rates reviewed September 2, 2026. These are ranges, not quotes — a real number depends on your equity position, the property, and how clean your exit plan looks. Book a free consultation and we’ll shop your file across our network of 230+ lenders to find where you actually land, rather than the range everyone else falls into.
A-lender vs. B-lender vs. private lender
Rate is only half the decision — speed and underwriting flexibility are the other half, and they’re usually why someone ends up looking at private financing in the first place.
| A-Lender (Bank) | B-Lender | Private Lender | |
|---|---|---|---|
| Typical rate | ~4–5.5% | ~5.5–9% | ~7–15%+ |
| Approval speed | 2–6 weeks | 1–3 weeks | Days to ~2 weeks |
| Underwriting basis | Credit, income, stress test | Credit + income, more flexible | Property equity, exit plan |
| Best fit | Strong credit, provable income, time to spare | Minor credit bruises, harder-to-document income | Bad credit, urgent timeline, non-standard file |
For more on how each of these actually treats an application, see our private mortgage for purchase guide and how private mortgage lending works.
What actually moves your rate
Loan-to-value. This is the single biggest factor. A mortgage sitting at 50% LTV is a very different risk than one at 80%, and the rate gap between those two files is often 3–4 points.
Position. A first mortgage is safer for the lender than a second, since the first mortgage gets paid out before anything else if the property has to be sold. Second mortgages and HELOCs price higher because they sit behind an existing loan.
Property type and location. A detached home in the GTA is easier to lend against and sell if things go wrong than a rural property or a condo with high fees — location and property type shift the rate by a point or more in either direction.
Exit strategy. Private mortgages are short-term by design. A lender who can see exactly how you’ll pay the loan out — a sale already listed, a credit-rebuild timeline, a refinance to a bank once your CRA balance clears — prices more confidently than one looking at an open-ended file.
Term length and structure. Shorter terms with an open (no penalty) prepayment option sometimes carry a slightly higher rate in exchange for the flexibility to exit early without a penalty.
If any of these apply to your situation, our guides on CRA debt and private mortgages and high-LTV private mortgages go deeper on how lenders actually underwrite those files.
What do private mortgage rates look like at different loan-to-value levels?
| LTV | Typical rate | Lender fee | Broker fee | How many lenders will fund it |
|---|---|---|---|---|
| Under 50% | 7% – 8.5% | 1% – 1.5% | 1% – 1.5% | Many, and they compete |
| 50% – 65% | 8% – 9.5% | 1.5% – 2% | 1% – 2% | Many |
| 65% – 75% | 9.5% – 11% | 2% – 3% | 1% – 2% | Fewer |
| 75% – 80% | 11% – 13% | 3% or more | 1.5% – 2% | A handful, mostly in big cities |
A second mortgage sits behind your existing loan, so it costs more at every level. These bands use combined LTV, meaning the first mortgage plus the new one:
| Combined LTV | Typical rate | Lender fee | Broker fee | Lender choice |
|---|---|---|---|---|
| Up to 65% | 9% – 10.5% | 2% – 3% | 1% – 2% | Good |
| 65% – 75% | 10.5% – 12% | 2.5% – 3.5% | 1.5% – 2% | Narrower |
| 75% – 80% | 12% – 13.5% | 3% – 4% | 2% | Limited |
| 80% – 85% | 13% – 15% | 3.5% – 4%+ | 2% | Very few |
Two things push a file up a band or two. One is the property: rural land, acreage, condos in oversupplied buildings and anything with a small pool of buyers all cost more, and some lenders cap them at 65% LTV. The other is loan size. Many private lenders set a minimum fee, so on smaller loans the fee eats a bigger share of what you borrow.
One practical move is to borrow less if you can. On a $720,000 home, asking for $490,000 (68%) instead of $540,000 (75%) can drop you a pricing band, which may save you around a point of interest and half a point of lender fee. If a smaller loan still solves the problem, say so to your broker before they shop the file.
If your equity is thin, read our guide to high-LTV private mortgages. If you already have a first mortgage you want to keep, see how a second mortgage works.
How much does a private mortgage really cost?
A private mortgage costs the interest plus every fee, and the fairest way to compare offers is to divide that total by the cash that reaches your lawyer. On a $450,000 one-year loan, that can mean 12% to 15% of the money you actually receive, even when the quoted rate is under 10%.
The fees come off the loan before you see it. You owe interest on the full $450,000, but the lender fee, broker fee, legal and appraisal reduce your net advance. So the number that matters is total cost divided by net cash.
Here are two offers on the same $450,000 loan, interest-only, for 12 months:
| Offer A: lower rate, heavy fees | Offer B: higher rate, light fees | |
|---|---|---|
| Interest rate | 8.5% | 9.5% |
| Interest for 12 months | $38,250 | $42,750 |
| Lender fee | 3% = $13,500 | 1% = $4,500 |
| Broker fee | 2% = $9,000 | 1% = $4,500 |
| Legal and appraisal | $2,750 | $2,750 |
| Total fees | $25,250 | $11,750 |
| Cash you receive | $424,750 | $438,250 |
| Total cost for the year | $63,500 | $54,500 |
| Cost as a % of cash received | 15.0% | 12.4% |
Offer A advertises a full point less in interest and still costs $9,000 more. That’s the main reason to ask for a full cost breakdown before you sign a commitment letter.
Short terms make this worse. If you repaid Offer B at month six, you’d pay $21,375 in interest plus the same $11,750 in fees, which is $33,125 on $438,250. That’s 7.6% for half a year, or about 15% annualized. The earlier you leave, the more the fees weigh.
These figures use simple interest and are rounded. Real private mortgages compound semi-annually, some borrowers pay legal costs separately, and this is a cost percentage, not a formal APR. Your quote will differ.
What happens to the fees if you renew or extend a private mortgage?
You’ll often pay another fee, commonly around 1% to 2% of the balance. On a $450,000 loan, a 1.5% renewal fee is $6,750. Renewal also isn’t guaranteed. Private mortgages have a maturity date, and the lender has no obligation to offer another term.
That surprises people who’ve only had bank mortgages, where a renewal letter shows up months early. With private money, the balance is due on the maturity date, and a late refinance is exactly when fees and rates get negotiated against you.
Before you sign, ask about these terms, because they change the real cost as much as the rate does:
Open or closed. An open mortgage can be repaid any time with no penalty. Some are closed for the first three or six months. A fully closed one may charge a penalty even if you refinance early.
Minimum interest. Many lenders guarantee a floor, such as three months of interest, even if you pay off early.
Interest reserve. Some lenders hold back several months of payments from your advance and pay themselves from it. On $450,000 at 9.5%, a six-month reserve is $21,375, and your net cash drops by that much. Plan the loan size around it.
Charge type. A standard charge covers the loan amount. A collateral charge can cover more and may make it harder to get a second mortgage behind it.
Discharge fee. Usually a few hundred dollars. Get the number up front, not at payout.
Ask for renewal fee, renewal conditions and discharge fee in writing before you fund. A lender who commits to a 1% renewal fee after twelve on-time payments is offering something real. One who won’t discuss it is telling you to plan on leaving.
For more on the legal paperwork, see our guide to legal advice for private mortgages.
What are the risks of a private mortgage?
The main risks are fees that stack up, a balance that doesn’t shrink, no guaranteed renewal, and fast enforcement if payments stop. None of them make a private mortgage a bad idea. They make the exit plan the most important part of the deal.
Fees add up fast. A lender fee, broker fee, legal costs and an appraisal can total 4% to 7% of the loan before you’ve made a payment. On a short term, that’s the biggest part of your cost.
The balance stays put. Interest-only payments keep your monthly cost low, but you owe the full amount at maturity. Your exit has to refinance or sell it all.
Renewal isn’t a right. If your credit, income or paperwork hasn’t improved in time, you may pay a renewal fee, take a higher rate, or scramble for a new lender.
Default moves faster than with a bank. In Ontario, lenders usually enforce through power of sale under the Mortgages Act, and the timeline is measured in months, not years. Legal costs get added to what you owe. Our page on power of sale mortgages explains both sides of that process. Keep a few months of payments set aside as a buffer.
Pricing varies a lot. Private lenders aren’t regulated like banks, and two offers on the same file can differ by thousands. Ask for the written disclosure statement from your broker and check their licence on the FSRA public registry.
How do you get out of a private mortgage?
You get out by refinancing into a B-lender or bank, selling the property, or paying the loan off from another source. The plan should start the day you fund, not in the last month of the term. Most exits take four to six weeks once the paperwork is ready, so a twelve-month loan needs you moving by month eight.
Here’s a realistic timeline for a one-year term:
Before you sign. Write down your target: which type of lender you’ll move to, the date, and what has to be true by then. If your broker can’t name a realistic exit, push back.
Months 1 to 3. Make every payment on time. Pull your credit reports from Equifax and TransUnion and fix any errors. Pay down card balances below 30% of their limits, and keep the accounts open.
Months 4 to 6. Gather what the next lender will want: two years of tax returns and Notices of Assessment if you’re self-employed, a zero CRA balance, proof of steady income, and any settled collections reported as settled.
Month 8. Start the exit. Ask your broker for a pre-check with a B-lender. If the plan depends on fixing the property, finish the work and get a fresh appraisal now.
Month 9. Submit the application.
Months 10 and 11. Appraisal, lawyer, conditions cleared, and funds ready to pay out the private loan.
Month 12. This is your buffer. If something slips, you still have room to negotiate an extension instead of accepting whatever’s offered in the last week.
Many B-lenders like to see about twelve months of clean payment history, though guidelines vary. For the full walkthrough, read switching from a private to a bank mortgage and our refinance page.
Do private mortgage rates change by province?
Not much in the big cities. Ontario, British Columbia and Alberta price similarly in major centres, and rural properties cost more everywhere. The differences are in who regulates the broker and how enforcement works if a loan goes bad.
Closing costs differ too. Ontario and BC charge land transfer or property transfer tax on purchases, while Alberta charges land titles fees instead of a transfer tax. Prices outside the large cities depend heavily on how many lenders will fund the property.
Our work is based in Ontario, so the ranges on this page reflect Ontario deals. If you’re buying or refinancing in another province, tell us early so we can match your file to lenders who actually fund there.
What does the official data say about private mortgage rates?
CMHC figures, as reported by WOWA, show the 25 largest mortgage investment entities averaged about 9.8% in the second quarter of 2025, down from a peak of 10.5% in early 2024. That’s close to the middle of the ranges on this page.
| Quarter | Average lending rate, top 25 MIEs |
|---|---|
| Q1 2023 | 8.6% |
| Q4 2023 | 10.4% |
| Q1 2024 | 10.5% |
| Q4 2024 | 10.3% |
| Q2 2025 | 9.8% |
Source: CMHC Residential Mortgage Industry Report, as summarized by WOWA. Latest figures available at time of writing. Check CMHC for the current edition.
The notable part is how little private rates followed the Bank of Canada. Over the same stretch, the policy rate fell by more than two points, but the average private rate eased by less than one. That’s why a cut at the central bank doesn’t mean a private lender will cut your rate.
The same source reports a private mortgage delinquency rate of about 2.01% in the fourth quarter of 2025, compared with 0.14% at credit unions. It’s a reminder that these loans carry more risk, and why lenders price and enforce the way they do.
Where rates are headed for the rest of 2026
The Bank of Canada held its policy rate at 2.25% on September 2, and its next two announcements are October 28 and December 9. In its September statement, the Bank said the upside risks to inflation had grown and that it was prepared to adjust policy, so a hold isn’t a certainty before year-end. (Confirm the wording against the Bank’s press release before publishing.)
Even if the policy rate moves, don’t expect private mortgage pricing to follow it point for point. As the data above shows, private rates respond more to how much capital lenders have to deploy and how competitive the market is. Treat any published range, ours included, as a starting point and get a live quote.
That said, private lender pricing also moves independently of the Bank of Canada, based on how much capital MICs and private lenders have available to deploy and how much competition there is in the space. Rate ranges above reflect the market as of early September 2026 and are reviewed regularly — check back or book a call for a live quote rather than relying on any published range as a guarantee.
Where rates are headed for the rest of 2026
The Bank of Canada held its policy rate at 2.25% on September 2, and its next two announcements are October 28 and December 9. In its September statement, the Bank said the upside risks to inflation had grown and that it was prepared to adjust policy, so a hold isn’t a certainty before year-end. (Confirm the wording against the Bank’s press release before publishing.)
Even if the policy rate moves, don’t expect private mortgage pricing to follow it point for point. As the data above shows, private rates respond more to how much capital lenders have to deploy and how competitive the market is. Treat any published range, ours included, as a starting point and get a live quote.
That said, private lender pricing also moves independently of the Bank of Canada, based on how much capital MICs and private lenders have available to deploy and how much competition there is in the space. Rate ranges above reflect the market as of early September 2026 and are reviewed regularly — check back or book a call for a live quote rather than relying on any published range as a guarantee.
What should you ask before accepting a private mortgage quote?
Ask for the total cost in dollars, not just the rate. A quote is only comparable once you know every fee, the cash you’ll receive, and what happens at maturity.
Put these questions to your broker or lender, and get the answers in writing:
- What are the interest rate, term and payment type?
- What’s the lender fee, in percent and dollars?
- What’s the broker fee, and who is it paid to?
- What do legal, appraisal and administration cost?
- How much cash will reach my lawyer after fees and any interest reserve?
- Is the mortgage open, closed or partly open?
- Is there a minimum interest period?
- What’s the renewal fee, and what do I need to qualify for renewal?
- What’s the discharge fee?
- What happens if I’m late with a payment?
To compare two offers, add the interest for the term to all the fees, then divide by the cash you receive. If a broker can’t give you that number, keep asking.
Frequently Asked Questions
What is the average private mortgage rate in Canada right now?
Private first mortgages typically run 7% to 11%, and second mortgages 9% to 14%. CMHC data reported by WOWA put the large lenders’ average near 9.8% in mid-2025. Your rate depends mostly on loan-to-value, mortgage position and property type.
Why are private mortgage rates so much higher than bank rates?
Private lenders take on borrowers that banks won’t — bad credit, unverifiable income, CRA debt, or urgent timelines — and they aren’t backed by CMHC, Sagen, or Canada Guaranty default insurance. The higher rate compensates the lender for that added risk and the short-term nature of the loan.
Do private mortgage rates follow the Bank of Canada rate?
Loosely. Private rates are influenced by prime (which tracks the BoC’s policy rate directly) but are also driven independently by how much lending capital is available and how competitive the private market is at any given time.
Can I negotiate a private mortgage rate?
Sometimes, especially on lower-LTV files with a strong exit plan. Working with a broker who shops your file across multiple lenders — rather than approaching a single lender directly — is usually the more effective way to get a competitive rate, since you’re creating actual competition for your business.
Is a private mortgage rate fixed or variable?
Most private mortgages carry a fixed rate for the term, since they’re short (6 months to 3 years) and interest-only. Variable-rate private mortgages exist but are less common.
How do I know if a quoted private mortgage rate is a fair one?
Compare the total cost — interest plus all fees — over the term, not just the headline rate, and get more than one quote. A broker with access to 230+ lenders can usually show you where your file actually sits in the market instead of the first number offered.
Rates in this article are ranges based on market conditions reviewed as of September 2, 2026, and are for general guidance only — they are not a rate commitment. Every private mortgage is individually underwritten. For current, personalized rates and terms across our lender network, book a free 15-minute consultation or call (416) 825-0142.
About the Author
Faizal Garasia is a licensed mortgage broker (FSRA Lic. #10557) with more than 15 years of experience arranging private, alternative and traditional mortgage financing across Ontario. He specializes in helping homeowners in arrears, self-employed borrowers and clients facing power of sale compare their options side by side.