Private Mortgage Lenders Ontario


 

The term ‘private mortgage’ has two meanings within the Ontario mortgage market. One meaning is the mortgage is sourced from a non Bank, institutional lender. The second meaning is the mortgage is sourced from an alternative mortgage company or individual. This article will focus on the second meaning of private mortgage lenders, which are private mortgages for those who do not fit the traditional banking approval mould, and how to get the best rate and terms, quickly.

A private mortgage can be approved as a first mortgage, second mortgage or third mortgage.

How do I get the best private mortgage lender rate?


The best way to ensure the best private lender mortgage rate in Ontario is to connect with a mortgage broker who is able and willing to provide all mortgage options. We have listed some of the best private mortgage lender rates below. However, by connecting with Altrua Financial, we will ensure the best match for private mortgage lenders. There are many lenders not on this list that may lend at a lower rate.

Private Mortgage Lender Rates as of February 2024


Private Mortgage Lender Approximate Mortgage Rate Range
Newhaven 8.74%
MFC 7.99%
Westborough 9.49%
River Rock 8.49%
Effort Trust 7.99%
Magenta 9.99%
Brightpath 8.99%
Squire 9.99%
Corwin Capital 9.99%
Buck Financial 8.25%
CMI 9.99%
Calvert 9.99%
Altawest 9.99%
Hosper Mortgage 9.99%

Altrua Financial has access to many other direct private lenders that may offer lower rates. Connect with us today.

Is a private mortgage a good idea?

A private mortgage is suitable for those who do not qualify through the traditional Canadian banking system. Perhaps income can’t be shown, or credit is in bad shape. Instead, private mortgage lenders tend to focus on the equity available in the property and how the mortgage will eventually be repaid.

How do private mortgages work in Ontario?

Private mortgages in Ontario are offered by literally over 1000 different lenders. These lenders offer different rates and terms and have different tolerances and measures for risk. However, the one common thing among these lenders is that there is far less paperwork and hoops to jump through.

How fast can I get a private mortgage?

Many private mortgage lenders advertise ‘1 day financing’. However, this uually isn’t possible. A more reasonable expectation would be from application to closing within 3 days. Sometimes, 2 days is possible, but if private mortgage funds are required fast, then 3 days is a good expectation. 

One reason for this is lenders will usually require an appraisal that can take until the next day, even on a rush basis. The lawyer funding the deal will also need a few hours to prepare the transaction. Altogether 2-3 days is typically a minimum.

How do I get approved for a Private mortgage?

In most cases, as long as there is at least 15% for down payment or 15% equity remaining for a refinance, a private mortgage can be approved. However, in 2023, in some cases, for example, with no income and distressed credit, the minimum approval can require 20%. 

Often, getting approved is not the difficult part. It’s about getting approved for the best deal with the best mortgage rate. 

The rate offered will depend on the ability to repay the mortgage and credit. For example, if there is a temporary layoff for a skilled trade, the likelihood of repayment is high once the borrower returns to work. 

Private Mortgage Risks


  • A private mortgage is typically seen as a temporary solution. If the private mortgage can’t be paid off in the short term of, perhaps, 1-3 years, this is less likely to lead to financial hardship. However, if the private mortgage is more permanent, this can lead to high long-term costs and potential issues.
  • The main risk for a private mortgage is that is cant be repaid with a lower rate mortgage.
  •  Perhaps the payments are included in the mortgage amount, so theres no regular monthly payment. With higher mortgage rates this can eat in to the home equity available. 
  • Weather payments are made interest only or included in the mortgage, it can get very expensive. In most cases, the cost of owinging a home with a larger private mortgage is very risky and will not yield a profit. 

Paying off a Private Mortgage


A private mortgage can be paid off at the end of the term, unless the term is fully open. Often trying to pay off a private mortgage before the end of the term can trigger additional costs/ fees. This is one main reason why its important to select the right term length when selecting a private mortgage.

The private mortgage is preferably paid off by a traditional, prime rate lender. If a prime rate lender approval is not quite possible, then a b lender mortgage is the next best option because these rates are often