A private mortgage can be one possible financing route for Toronto property owners or buyers who do not fit the criteria of conventional lenders. Private lenders may place greater emphasis on the property, available equity, overall transaction and repayment or exit plan, although borrower circumstances still matter. Private mortgages commonly involve different costs and risks from conventional financing and are generally approached as shorter-term solutions rather than permanent financing.
Before proceeding, understand the total borrowing cost, lender and brokerage fees where applicable, mortgage terms, renewal or discharge conditions and your realistic plan for leaving the private mortgage. Ontario borrowers should also confirm they are dealing with appropriately licensed mortgage professionals.
This guide provides general Ontario mortgage information as of August 11, 2026. Qualification and suitability depend on the borrower, property, lender and transaction.
Why Toronto Borrowers Consider Private Mortgages
Conventional mortgage underwriting typically evaluates several parts of a borrower’s financial position. A borrower with an unusual income structure, recent credit difficulty or another complex situation may find that a conventional product does not fit the circumstances.
Private mortgage financing takes a different approach.
The property and its value can play a particularly important role, along with the amount being borrowed, available equity and a workable plan for repayment or refinancing. That does not mean credit, income or repayment ability become irrelevant. Each private lender establishes its own criteria and reviews the complete transaction before deciding whether to lend.
Turkin Mortgage’s current Toronto private-mortgage information similarly describes private financing as flexible, generally shorter-term financing where property value, equity and the planned exit can receive significant attention.
The key point is that private financing should not be viewed simply as an easier version of a conventional mortgage. It is a different financing structure with its own purpose, costs and risks.
Situations Where Private Financing May Be Considered
There is no single profile of a private mortgage borrower. Situations vary considerably.
For example, a Toronto homeowner may be reviewing financing after a conventional application does not fit a lender’s requirements. Another borrower may be self-employed and have income that requires additional explanation. Someone else may own a property with meaningful equity but need short-term financing while working toward a longer-term solution.
Private financing can also arise in some refinancing, debt-consolidation or property-related situations. Turkin Mortgage’s live service information identifies refinancing and debt consolidation among circumstances in which private financing may be considered.
None of these circumstances automatically results in approval. The lender still needs to determine whether the proposed mortgage, property and repayment plan meet its requirements.
Start With the Purpose of the Mortgage
Before comparing lenders, define what the mortgage is supposed to accomplish.
Ask yourself:
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How much financing is actually required?
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Why is the money needed?
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How long is the financing expected to remain in place?
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What needs to happen during that period?
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What is the realistic plan for repaying, refinancing or discharging the mortgage?
These questions are especially important with shorter-term financing.
A mortgage that solves an immediate problem but creates an unaffordable situation several months later may not be a useful solution. The initial funding and the eventual exit should therefore be considered together.
Understand What the Lender Is Evaluating
Private lenders may consider the property’s location, condition, type and marketability together with the amount of existing and proposed mortgage debt.
Equity can be important because the property secures the mortgage.
The borrower’s circumstances also remain relevant. Depending on the lender and transaction, information about income, debts, current mortgages, credit history and the intended repayment strategy may be reviewed.
Do not assume that “private” means financial information will never be requested or reviewed. Mortgage professionals and lenders need sufficient information to assess the transaction, meet legal and regulatory obligations and determine whether the proposed financing is appropriate.
FSRA emphasizes that borrowers should provide accurate information during the mortgage process and that knowingly misrepresenting information can have serious consequences.
Compare the Total Cost, Not Only the Interest Rate
Interest rate matters, but it is only one component of borrowing cost.
Depending on the transaction, costs may include lender charges, brokerage compensation, appraisal expenses, legal expenses, discharge costs or other transaction-specific amounts. Not every cost applies to every mortgage.
This makes it important to review the complete written proposal rather than comparing financing based on one headline number.
FSRA advises Ontario borrowers to understand mortgage fees, penalties and total borrowing costs and requires regulated mortgage professionals to provide specified disclosures.
If you are researching how private financing is structured locally, this overview of private mortgage lending in Toronto with Turkin Mortgage provides additional information about the process, property considerations and common reasons borrowers explore this type of financing.
Before accepting any option, compare the actual terms offered for your specific circumstances.
Check the Mortgage Professional’s Ontario Licence
Mortgage brokering in Ontario is regulated by the Financial Services Regulatory Authority of Ontario, commonly known as FSRA.
FSRA explains that licensed mortgage professionals are subject to education, suitability, conduct and disclosure requirements. Mortgage brokerages are licensed businesses, while individual brokers and mortgage agents operate through licensed brokerages.
Private mortgages have additional licensing considerations.
Since April 1, 2023, Ontario has had Level 1 and Level 2 mortgage-agent licensing classes. FSRA states that Level 2 agents may deal with the broader group of lenders that includes private individuals and other private or alternative mortgage lenders. Mortgage brokers also undertake enhanced education relating to private mortgages.
Borrowers can use FSRA’s public registry to check the licensing status of mortgage brokerages, brokers and agents.
Read the Disclosures Before Signing
A private mortgage should not be treated as a transaction where speed replaces understanding.
Ontario mortgage brokerages, brokers and agents are required to disclose material mortgage risks in writing and in plain language. FSRA also states that borrowers are generally entitled to at least two business days to review the mortgage disclosure statement before signing the mortgage agreement or mortgage instrument, unless the borrower elects to waive that period.
Use the review period.
Look carefully at:
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Interest and payment obligations
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Lender or brokerage fees where applicable
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Term length
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Renewal provisions
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Prepayment or discharge conditions
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Default provisions
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Legal costs
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Other conditions attached to funding
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What happens if the planned exit cannot be completed on time
Ask questions about anything that is unclear.
You may also want independent legal advice concerning mortgage contracts and legal consequences. FSRA itself encourages borrowers to understand mortgage contracts and consider legal advice when necessary.
Build the Exit Strategy Before You Enter
The exit strategy is one of the most important parts of shorter-term financing.
An exit strategy explains how the private mortgage is expected to end.
Depending on the circumstances, that might involve moving to another mortgage product after the borrower’s situation changes, selling the property, paying down debt or another realistic source of repayment.
The important word is realistic.
If the plan depends on several uncertain events occurring perfectly, consider what happens if one of them is delayed.
Ask:
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What needs to change before refinancing becomes possible?
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How much time is realistically required?
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What happens if the mortgage reaches maturity first?
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Are extension or renewal options available?
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What would they cost?
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What is the backup plan?
Thinking through those questions before borrowing can reveal whether the proposed mortgage truly creates a bridge to a better position.
Know the Consequences of Missing Payments
A mortgage is secured against real property.
Failure to make required payments can therefore have consequences beyond an ordinary unsecured debt.
FSRA warns Ontario borrowers that mortgage default may ultimately lead to enforcement such as power of sale or foreclosure, depending on the circumstances. It also advises borrowers who anticipate difficulty making payments to contact their lender promptly rather than ignore the issue.
That makes affordability analysis essential even when financing is intended to be temporary.
A private mortgage should not be evaluated solely according to whether funding is available today. The borrower must also consider whether the payments, costs and exit plan are workable.