Looking for a Private Mortgage in Ontario?

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Buying a home is an exciting milestone. It’s a symbol of independence and the start of a new chapter. But for many people, qualifying for a mortgage with a traditional bank can feel like a major hurdle. Lenders often require a high credit score, stable income, and a low debt-to-income ratio — criteria that not everyone meets.

In these situations, a private mortgage can be a helpful solution. It’s a type of home loan provided by a private individual or business, rather than a traditional bank. Because private lenders have more flexible criteria, they may be willing to work with borrowers who don’t qualify for conventional financing. In this article, we’ll explore what private mortgages are, when they make sense, and what to watch out for.

What Is a Private Mortgage?

A private mortgage is a loan secured against your property, but it’s issued by a private investor, mortgage investment corporation (MIC), business, or even someone you know — like a friend or family member — instead of a bank or credit union.

These loans are typically short-term, often one year in length, and are designed to provide temporary financing for borrowers who need time to improve their financial situation or secure longer-term financing later.

Advantages of Private Mortgages

1. Easier to Qualify For

Private lenders place less emphasis on your credit score and income history. Instead, they focus mainly on the value and condition of the property you’re using as collateral. This makes private mortgages more accessible to people with poor credit, inconsistent income, or recent self-employment.

2. Faster Approvals and Funding

Traditional mortgages can take weeks — or even months — to close. Private mortgages, by contrast, can often be approved and funded within just a few days. This speed can be critical if you're facing foreclosure, buying under tight timelines, or taking advantage of an urgent investment opportunity.

3. Flexible Terms and Conditions

Private lenders may be open to negotiating loan terms that work with your situation. That could include flexible repayment schedules, interest-only payments, or reduced prepayment penalties. Since you’re not dealing with a big institution, there’s more room for discussion.

Disadvantages of Private Mortgages

1. Higher Interest Rates

Because private mortgages are considered higher-risk loans, the interest rates are typically higher than what traditional banks offer. While you can try to negotiate, ultimately the lender sets the terms.

2. Short-Term Nature

Most private mortgages are usually offered with 1-year terms (there are some exceptions). You’ll need to pay off the loan, refinance, or renew it at the end of the term. If you're not prepared, you could face penalties, renewal fees, or even be forced to sell your property.

3. Additional Fees

Expect extra costs like lender fees, broker fees, legal fees, and appraisal fees. These can add up to thousands of dollars. Be sure to review the full cost breakdown before moving forward.

Is a Private Mortgage a Suitable Choice for You?

A private mortgage may be a good option if you:

Can’t qualify with a bank due to credit, income, or other issues

Only need short-term financing

Expect your financial situation to improve within 1–3 years

However, it may not be the right move if you're already struggling with debt or cash flow. Private mortgages can help you bridge a gap, but they’re not a long-term fix for ongoing financial hardship.

Before making a decision, speak with a qualified mortgage broker or financial advisor. They can help you understand your options and find a solution that works for your needs.

If you’re exploring private mortgage lenders in Canada, reputable companies like 360Lending offer flexible, short-term solutions tailored to your situation. Whether you’re dealing with a low credit score, need fast funding, or are in between jobs, we can help guide you through the process with clarity and confidence.