You are looking at private mortgage lenders in Toronto because a bank said no. Or because you know a bank will say no and you want to understand what comes next. Either way, you are in the right place, and the situation is more manageable than it feels right now.
A Toronto private mortgage is not a permanent financing solution. It is a 12-month bridge. The entire structure, the rate, the fees, the terms, all of it is built around one goal: close the transaction, fix the qualifying problem that disqualified you from institutional lending, and refinance into a prime or B-lender at the end of the term. The private lender does not want to own your Toronto property. They want to earn a return on secured capital for 12 months and get repaid. Your interests are aligned: you both want this to be temporary.
This guide covers what Toronto private mortgage lenders actually look for (it is not your credit score), the 2026 rate landscape, who qualifies, the five-step process to secure one, the exit plan from private to prime, and the fee structure you need to understand before you sign anything.
Short answer
Toronto private mortgage rates run approximately 7% to 11% for first-position and 10% to 15% for second-position in 2026, with 1-year terms and lender fees of 1% to 3% of the loan amount. Private lenders focus on property equity (LTV 65%-75%) and exit strategy, not credit score or income ratios. Most Toronto private mortgages are 12-month bridges for borrowers with recent credit events, complex self-employed income, thin Canadian credit history, or tight closing timelines. A licensed FSRA mortgage agent arranges access to MICs and private investors; the service is free on most standard files.
What is a private mortgage in Toronto?
A private mortgage in Toronto is a loan secured against real property and funded by a non-institutional capital source: an individual investor, a mortgage investment corporation (MIC), or a private lending pool. The lender is not a bank, credit union, or federally regulated institution. They are not subject to OSFI's stress-test rules or the same income-qualifying criteria. They set their own underwriting standards, which are typically built around two questions: how much equity is in the property, and what is the plan to repay the loan at maturity?
This is the core distinction from bank lending. A Big-Five bank says: can you qualify for this mortgage on your income, per OSFI guidelines, regardless of how much equity you have? A private lender says: is there enough equity in this Toronto property that if you default, I will recover my capital through a power-of-sale, and does this borrower have a credible plan to refinance or sell within 12 months?
Private mortgages in Toronto are governed by FSRA (the Financial Services Regulatory Authority of Ontario). Anyone arranging a private mortgage for a Toronto borrower must be a licensed FSRA Mortgage Agent Level 1 or higher, operating under a registered brokerage. Private lenders are not directly regulated the same way institutional lenders are, but the agents who connect borrowers to private capital are. That means written fee disclosure, written cost-of-borrowing disclosure, and a registered charge on title, all mandatory under FSRA standards of practice.
Who uses private mortgages in Toronto: the five common scenarios
Private mortgage demand in Toronto concentrates in a predictable set of borrower profiles. If you recognize yourself in one of these, the path forward is clear.
1. Recent credit event: consumer proposal or bankruptcy discharge
A consumer proposal or bankruptcy discharge leaves a mark on the credit bureau that most prime lenders will not look past for 2 to 3 years after discharge. A private mortgage bridges the gap between discharge and prime-lender re-qualification. The 12-month private term is used to rebuild credit (secured credit card, trade lines, timely rent payment) so that at renewal, a B-lender or prime lender can step in. This is the most common Toronto private mortgage scenario.
2. Self-employed income that does not qualify under OSFI stress-test rules
A self-employed Toronto borrower with $200,000 in reported gross revenue and $90,000 in net income (after business expenses) qualifies at $90,000 for OSFI-regulated lenders. The same borrower using a stated-income or gross-revenue approach with an alternative lender can often qualify meaningfully higher. When neither approach works and the purchase is time-sensitive, a private bridge allows the close while the business structure is optimized for prime-lender qualifying on the 12-month renewal.
3. Newcomer to Canada with thin Canadian credit
A recent immigrant or newcomer professional may have strong foreign income and significant savings, but less than 24 months of Canadian credit history. Big-Five banks require at minimum 2 years of established Canadian credit for standard qualifying. A private mortgage bridges the first 12 to 18 months of Canadian residency, during which the borrower builds a Canadian credit profile (secured card, car financing, trade lines) that qualifies for prime lending at renewal.
4. Investor who has exceeded the Big-Five rental property limit
The Big-Five banks cap rental property financing at 4 to 6 properties (varies by bank) and apply increasingly restrictive underwriting as the portfolio grows. An active Toronto real estate investor who has reached the bank cap needs alternative capital for acquisitions. Private mortgages and MICs serve this investor segment, typically on shorter hold periods where the income from the property is being used to fund an equity-add renovation before refinancing into a CMHC multi-unit or commercial lender.
5. Tight closing timeline: under 30 days
Bank mortgage approvals require 2 to 3 weeks of underwriting plus appraisal, title, and closing logistics. A Toronto private mortgage can close in 5 to 10 business days because the underwriting is collateral-focused rather than income-focused. When a purchase firm goes unconditional with a 21-day closing and a financing condition is no longer available, a private lender is often the only path to funding the transaction without losing the deposit.
Private mortgage rates in Toronto in 2026
| Mortgage type | Interest rate range (2026) | Lender fee range | Typical term |
|---|---|---|---|
| First-position private mortgage | 7% to 11% | 1% to 3% | 1 year (renewable) |
| Second-position private mortgage | 10% to 15% | 1.5% to 3% | 1 year |
| Bridge loan (existing equity, short close) | 8% to 11% | 1% to 2.5% | 3 to 6 months |
| B-lender alternative (for comparison) | 6.5% to 8.5% | 0.5% to 1.5% | 1 to 2 years |
| Prime lender target rate | 4.69% to 5.29% | None | 5-year fixed or variable |
May 2026 illustrative ranges. Actual rates depend on LTV, property type, borrower credit profile, and specific lender. All fees must be disclosed in writing per FSRA standards before commitment.
The rate math that matters: on a $500,000 private first mortgage at 9%, the annual interest cost is $45,000 (approximately $3,750 per month). On the same balance at a prime 5-year fixed of 5.09%, the annual interest component is $25,450 (approximately $2,120 per month). The $1,630 per month difference is the real cost of the private bridge. Most Toronto borrowers in a private mortgage situation find this cost acceptable for 12 months given the alternative is not owning or closing the transaction at all.
What Toronto private lenders actually look at
Understanding private lender underwriting is the most useful thing you can know going into the process. It is not what bank underwriting looks at, and the difference is significant.
Loan-to-value ratio (LTV): The primary factor. Most Toronto private lenders cap first-position lending at 65% to 75% LTV. On a $900,000 Toronto property, that means the total first mortgage cannot exceed $585,000 to $675,000. Second-position private mortgages typically cap at 75% to 80% combined LTV (first plus second). The Toronto market's strong property values make this accessible for most established homeowners.
Property quality and location: Private lenders are lending against the property as collateral. A detached or semi-detached home in an established Toronto neighbourhood (East York, North York, Scarborough, Etobicoke, midtown Toronto) is the most liquid collateral and attracts the most competitive private rates. A condo in a high-rise with construction quality concerns, or a rural or semi-rural property far from Toronto, attracts higher rates or a lower LTV cap because the forced-sale recovery is less certain.
Exit strategy clarity: A private lender lends for 12 months. They need to see a credible plan for repayment. The two paths are: refinance into a prime or B-lender (most common) or sell the property. If you are using a private mortgage because you had a consumer proposal discharged 6 months ago, the exit plan is "discharge is 18 months old when the private term matures, which allows a B-lender to consider the file." If you are self-employed with two strong T2 corporate returns filed but not the two-year average the banks want, the exit plan is "second T2 will be filed and available in 8 months." The exit plan must be written, specific, and credible.
Credit score: Reviewed but not the deciding factor. Private lenders want to understand the story behind a low credit score. A 540 credit score caused by a single consumer proposal now discharged for 6 months is a very different risk profile than a 540 credit score from a chronic pattern of missed payments on multiple accounts. Private lenders look at the bureau to understand the history, not to set a minimum threshold.
Income: Confirmed but not stress-tested. Private lenders want to know you have income sufficient to service the interest payments, but they do not apply OSFI's stress-test qualifying rate. They want to see that you can make the monthly interest payment without defaulting, not that you qualify under a hypothetical higher-rate scenario.
MIC vs individual investor: understanding Toronto private lender types
When you hear "private mortgage lenders Toronto," the capital typically comes from one of two sources. The distinction matters for loan amounts, decision speed, and renewal options.
Mortgage Investment Corporations (MICs): Federally regulated pooled investment funds structured under the Income Tax Act (Canada). MICs pool capital from multiple investors and deploy it as mortgages. For Toronto borrowers, a MIC provides private capital at scale: loan amounts of $100,000 to $5,000,000+ are feasible, multi-unit residential and small commercial properties are commonly financed, and the underwriting is more systematic than an individual lender decision. MICs often have clearer published criteria and more consistent renewal terms. Their rates are typically in the lower part of the private range (7% to 10% for first-position) because their capital cost is lower than an individual investor's.
Individual private investors: High-net-worth individuals or family offices who deploy personal capital into real estate-secured mortgages. Individual investors are often more flexible on deal structure and can make faster decisions (sometimes same-day) for the right file. They tend to focus on smaller loan amounts ($100,000 to $800,000) and standard residential properties. Rates can be higher or lower than MICs depending on the investor's yield requirements and their relationship with the presenting agent. Individual investors are typically not found through advertising; they work exclusively through trusted agents who have an existing relationship with them.
The 5-step process to secure a Toronto private mortgage
- Assess your equity position precisely. Get an estimate of your current market value (a realtor CMA or an agent's market knowledge works for an initial estimate; the formal appraisal comes later in the process). Calculate your current mortgage balance and any other registered charges. That gives you the available equity and whether you meet the LTV threshold.
- Define your exit strategy in writing before you apply. Know which prime or B-lender qualifying criteria you will meet in 12 months and what specific actions between now and then get you there. If you cannot articulate a credible exit, the private mortgage will roll into a renewal rather than exit to institutional lending, and the cost compounds.
- Assemble your collateral documentation. The short list: most recent mortgage statement (showing the balance and lender), most recent property tax bill (confirming municipal value), a brief written summary of the credit event or qualifying challenge, and any evidence of income (even informal). You do not need T4s and pay stubs the way you would for a bank. The property document package is primary.
- Work with a licensed FSRA agent who has an active private lender network. Tell them your situation plainly and completely. Partial disclosure leads to declined files at the last minute when the lender's lawyer reviews title. Full disclosure on day one allows the agent to route your file to the right capital source and set realistic expectations on rate, fee, and LTV.
- Review every line of the commitment letter and fee disclosure before signing. The lender fee (1% to 3%), any agent fee (0% to 2%), the interest rate, the term, the prepayment rights, and the renewal terms must all be in writing. The cost-of-borrowing disclosure is required by FSRA. If anything is verbal only, it does not exist. Do not proceed without the full written disclosure package.
The exit plan: from private to prime in 12 to 24 months
The exit plan is where most private mortgage clients do not get enough advice. Here is what the 12-month exit plan actually looks like for the five common scenarios, written the way I walk through it with every client at the start of a private mortgage engagement.
Consumer proposal or bankruptcy discharge
FSRA-regulated lenders have different discharge seasoning requirements. B-lenders often consider files at 12 to 24 months post-discharge. Prime lenders typically want 24 to 36 months. Build the timeline: if discharge was 8 months ago when the private mortgage closes, at the 12-month private term maturity, the discharge will be 20 months old. At that point, a B-lender is a realistic target. The 12-month private term also provides a track record of on-time mortgage payments, which significantly improves the credit profile.
Self-employed income complexity
Identify which qualifying methodology will work at renewal. If the business generates T2 corporate returns, confirm when the next T2 will be filed. Many self-employed Toronto borrowers need two consecutive strong T2 years to qualify with a B or prime lender. Know the filing date, confirm the projected net income, and map whether the two-year average will be sufficient at the 12-month mark or if a second renewal year is needed.
Newcomer with thin Canadian credit
Open a secured credit card in the first month of the private term. Add a second trade line at month 3 (car financing, small personal loan, or retail card). By month 12, you will have 12 months of on-time payment history on at least two accounts, which is the minimum most B-lenders want to see. Some prime lenders will also consider newcomer files with 12 months of Canadian credit history if the income is strong and the LTV is conservative.
Investor past the bank cap
Identify the specific exit at time of purchase: either a CMHC-insured multi-unit refinance (requires the property to have stabilized rental income for 12 months) or a commercial mortgage on the portfolio as a whole (requires formalized rental agreements, property management documentation, and commercial underwriting). The private mortgage holds the asset during the stabilization period.
Tight close timeline
If the private mortgage was taken because of a timeline issue rather than a qualifying issue, the exit plan is a clean refinance into a prime lender at maturity. Start the prime-lender application 90 days before the private mortgage matures. Do not wait for the maturity notice.
The private mortgage is not the problem. It is the solution to the problem that already existed. The real question is whether you have a specific, achievable plan to exit the private mortgage within 12 to 24 months. If you do not, I will not place the file, because a permanent private mortgage is not a financing structure. It is a slow equity drain.
Jenny Tate, Mortgage Agent Level 1, FSRA #M22002086, Tango Financial Inc.
Second mortgage vs private first mortgage: the equity math
If you already have a low-rate first mortgage that you do not want to break, a private second mortgage may be more cost-effective than a private refinance of the full first.
The math: if you locked a 5-year fixed first mortgage in 2021 at 2.25% with 2 years remaining on the term, breaking it to do a full private refinance triggers an Interest Rate Differential (IRD) penalty of approximately $12,000 to $18,000 on a $600,000 balance. A private second mortgage at 11% to 14% on a $100,000 equity draw carries approximately $11,000 to $14,000 in interest over 12 months. The second mortgage may be cheaper than the IRD penalty plus the higher private rate on the full balance.
The detailed decision framework with IRD penalty math is in our second mortgage Toronto guide. The HELOC versus refinance comparison is in our HELOC vs refinancing guide.
What the fee disclosure looks like (what you must see in writing)
Before you commit to any Toronto private mortgage, you must receive and sign a written fee disclosure. FSRA requires this under its standards of practice for mortgage agents. The disclosure must include:
- Lender fee: the dollar amount or percentage of the loan amount charged by the private lender, typically 1% to 3%
- Broker/agent fee: any fee charged by the agent for arranging the private mortgage, required in writing; on standard residential files many agents charge nothing as the lender pays a finder's fee
- Interest rate: the annual percentage rate including the effective cost of the lender fee
- Term and renewal conditions: the 12-month term end date, what the renewal process looks like, and what happens if you do not renew
- Prepayment rights: can you pay the mortgage off early? What is the penalty if any? (Private mortgages often allow early repayment with 3 months' notice or a small penalty)
- Appraisal and legal fees: typically $350 to $600 for a drive-by or desktop appraisal, $1,200 to $2,000 in legal fees for the lender's lawyer to register the charge on title
What to do next
If a Toronto private mortgage is the right solution for your situation, the fastest path forward is a 15-minute conversation with a licensed agent who has active relationships with Toronto private lenders. The conversation is free, and a skilled agent will tell you honestly whether a B-lender solution might work first and save you the higher private rate.
Bring the following to the call: your current mortgage balance and estimated property value, a brief summary of the credit event or income situation that disqualified you from prime lending, your required timeline, and your initial thinking on the exit plan. That 15-minute conversation will tell you whether a private mortgage is right for your file, what rate and LTV you can realistically expect, and what the 12-month exit path looks like.
Here is what I want you to know before the call: private mortgages work when the qualifying problem has a clear 12-month solution and the equity is there to support the structure. They do not work as a permanent financing strategy. If you come into the call with a clear exit plan and the equity numbers work, this is a manageable, temporary solution to a solvable problem. If the exit plan is unclear, I will tell you that before we proceed.
Need a Toronto private mortgage?
Book a free 15-minute discovery call with Jenny Tate. Get an honest assessment of whether private lending is the right path, what rates and terms are realistic for your file, and what the exit plan looks like. FSRA-licensed, 50+ lenders including private capital sources.
Jenny Tate
Mortgage Agent Level 1 · FSRA #M22002086 · MBA in Finance · Lean Six Sigma Black Belt
Jenny Tate is a licensed mortgage agent serving Toronto and the Greater Toronto Area with access to 50+ lenders including private capital sources, MICs, B-lenders, monolines, and Big-5 banks. With an MBA in Finance and a Lean Six Sigma Black Belt, she specializes in complex files including self-employed income, newcomer borrowers, credit events, and private mortgage structures. She has earned 50+ five-star Google reviews across the GTA. Licensed with Tango Financial Inc. (FSRA #13691).
Frequently asked questions: private mortgage lenders Toronto
What is a private mortgage in Toronto?expand_more
A Toronto private mortgage is a short-term loan secured against a property and funded by a non-institutional source: an individual investor, a mortgage investment corporation (MIC), or a private lending pool. Private lenders focus on property equity and exit strategy rather than credit score or income ratios. Typical terms are 1 year, with rates of 7% to 11% for first-position in 2026. Used as a bridge to prime-lender qualifying.
What are private mortgage rates in Toronto in 2026?expand_more
Toronto private mortgage rates in 2026 run approximately 7% to 11% for first-position and 10% to 15% for second-position. Lender fees are 1% to 3% of the loan amount. B-lenders (Equitable Bank, Home Trust) are a cheaper alternative at 6.5% to 8.5% when the file qualifies. All fees must be disclosed in writing per FSRA standards before you commit.
Who uses private mortgages in Toronto?expand_more
The five most common Toronto private mortgage scenarios: recent credit events (consumer proposal, bankruptcy) that disqualify prime lending; self-employed income too complex for OSFI stress-test qualifying; newcomers with strong income but thin Canadian credit history; investors past the Big-Five rental property limit; and buyers with tight closing timelines under 30 days where traditional underwriting cannot complete in time.
How much equity do I need for a private mortgage in Toronto?expand_more
Most Toronto private lenders require at least 25% to 35% equity in the property after funding (LTV of 65% to 75%). On a $900,000 Toronto property, that means combined first mortgage debt of $585,000 to $675,000 maximum. Second-position private mortgages typically cap at 75% to 80% combined LTV. Toronto's strong property values make this accessible for most established homeowners.
What is the difference between a B-lender and a private lender?expand_more
A B-lender (Equitable Bank, Home Trust, Merix Alternative) is a regulated institutional lender that uses equity-and-income qualifying rather than prime-bank income ratios. B-lender rates run 6.5% to 8.5% in 2026, which is lower than private. Use the B-lender when the file qualifies. Private is the fallback when institutional lending cannot close the deal because of documentation gaps, timeline constraints, or credit events too recent for even B-lenders to accept.
How do I plan my exit from a private mortgage?expand_more
Plan the exit at the same time you apply. The two paths are: refinance into a prime or B-lender at maturity once the qualifying issue is resolved, or sell the property. A consumer proposal discharged 6 months ago has an 18-month-old discharge when the private matures (B-lender territory). A self-employed borrower waiting for a second T2 corporate return will have it in hand at the 8 to 12-month mark. Map the specific action and timing before signing the private mortgage commitment.
What is a mortgage investment corporation (MIC)?expand_more
A mortgage investment corporation (MIC) is a federally regulated pooled mortgage fund that lends private capital against real estate. MICs pool capital from multiple investors and deploy it as mortgages, structured under the Income Tax Act (Canada). For Toronto borrowers, MICs provide private-mortgage capital at scale: larger loan amounts, multi-unit residential, and more systematic underwriting than an individual private investor. MIC rates are typically in the lower part of the private range (7% to 10% for first-position).
How fast can a private mortgage in Toronto close?expand_more
Toronto private mortgages can typically close in 5 to 10 business days once the file is assembled, compared to 2 to 3 weeks for an institutional approval. For tight closing timelines (bankruptcy-to-purchase, bridge financing, or time-sensitive acquisition), private lenders are often the only option. Confirm the specific lender's closing timeline with your agent before committing to a purchase firm on a short close date.
What fees are charged on a private mortgage in Toronto?expand_more
Typical fee structure on a Toronto private mortgage in 2026: lender fee 1% to 3% of the loan amount, agent fee 0% to 2% (disclosed in writing per FSRA, free on many standard files), appraisal fee $350 to $600, title insurance $300 to $500, and legal fees $1,200 to $2,000 for the lender's lawyer. All fees must be disclosed in writing before commitment under FSRA standards of practice. Never proceed without the written disclosure package.
Can I use a private mortgage to consolidate debt in Toronto?expand_more
Yes. A private refinance in Toronto can consolidate high-interest consumer debt (credit cards, lines of credit, CRA arrears) into a single mortgage. At 8% to 10%, a private mortgage is still lower than 19% to 22% credit card rates, improving monthly cashflow even at private pricing. The critical addition: a 12-month credit-repair plan so you can refinance the private consolidation mortgage into a prime lender at maturity at 4.89% to 5.29%.