Private Mortgage Rates in Canada

Private lenders price private mortgage rates based on risk and how quickly they can recover their money if something goes wrong. The biggest pricing drivers are:

• Loan-to-value (LTV): Higher LTV usually means higher rates and/or higher fees
• 1st vs 2nd mortgage: 2nd mortgages cost more
• Property type and location: Unique or harder-to-sell properties, as well as rural properties, cost more
• Borrower profile: Credit score influences pricing, even in private lending
• Exit strategy: A clear plan to refinance, sell, or pay down improves lender confidence
• Term length: Longer terms can cost more, but fees matter more on short terms

A 1st mortgage is first in line to be repaid if the property is sold or the lender must enforce security. Because the lender has the first claim on the property's value, 1st private mortgage rates are typically lower than 2nd mortgage rates.

A 2nd mortgage is repaid after the 1st mortgage. That added risk is why second mortgages usually have higher rates and/or higher lender fees.

Loan-to-value (LTV) compares how much you're borrowing to the value of the home:

LTV = (total mortgages on the property ÷ property value) × 100

For example, if your home is worth $800,000 and your total mortgage after the new private mortgage would be $600,000, your LTV is 75%.

As LTV increases, lenders have less equity cushion. That typically means higher rates, stricter terms, or both. Private lenders prefer lower LTVs because they can recover their capital more easily if the borrower defaults.

Private mortgage lenders usually charge a lender fee, which is commonly around 2% of the private mortgage amount. The lender fee compensates the private lender for things like administering your mortgage and finding private investors and individuals who are willing to finance your mortgage.

If your mortgage is a particularly risky one, such as if you have a high LTV ratio, you might be charged a higher lender fee. A higher lender fee might also be required due to the greater difficulty of finding investors to fund your mortgage.

Private mortgages include fees beyond the interest rate. The most common are:

• Lender fee: A fee charged by the lender, often expressed as a percentage of the loan amount
• Broker fee: May be charged if a broker arranges the mortgage (often separate from the lender fee)
• Legal fees: Borrower legal costs and sometimes lender legal costs
• Appraisal: Often required to confirm property value
• Other costs: Mortgage registration, title insurance, or discharge fees

Tip: Ask for an all-in cost summary before you commit to a private mortgage. Two offers with the same interest rate can have very different total costs once fees are included.

APR (annual percentage rate) is the interest rate plus certain fees expressed as a yearly cost. Because private mortgages often include lender and broker fees, in addition to other closing costs, APR can be noticeably higher than the “headline” interest rate.

APR is especially useful when comparing private mortgage offers because it helps you see the true cost of borrowing across options.

Here's a simplified example to show how fees can change the real cost of a private mortgage rate:

• Loan amount: $500,000
• Term: 12 months
• Interest rate: 10%
• Lender fee: 1.49% of the loan
• Broker fee: 1.49% of the loan

Even if the interest rate looks reasonable, adding fees can push the APR materially higher, especially for short terms.

Do I have to pay broker fees for a private mortgage?

Yes, you still have to pay broker fees in addition to a lender fee.

Private mortgage lenders cannot advertise directly to the public in most provinces, and so they must work through a licensed mortgage broker in order to source borrowers. In order to compensate mortgage brokers for their work in matching you with a private lender, brokers usually charge a broker fee.

For a private mortgage, the broker fee typically matches the lender fee. This means that if the private lender fee is 2%, you can expect the broker fee to be around 2% as well.

Want to learn more about private mortgages? We have guides on private mortgage lenders in Alberta and for British Columbia private mortgage lenders. You can also head to our Private Mortgage Lenders page to learn more about:

What are private mortgage rates in Canada?

Private mortgage rates vary widely. Pricing depends on LTV, whether it's a 1st or 2nd mortgage, the property, and term length. Use the current private mortgage rates table above to see what's available today.

Are private mortgage rates higher than bank rates?

Yes. Private mortgages trade a higher cost for flexibility and faster approvals, especially for borrowers with non-traditional income or credit challenges.

Why are 2nd private mortgages more expensive?

Second mortgages are repaid after the first mortgage, so the lender takes on more risk. That typically increases rates and/or fees.

Do I have to pay broker fees for a private mortgage?

Often, yes if a broker arranges the deal. Broker fees are commonly separate from the lender fee. Always ask for a full fee breakdown in writing.

What term lengths do private mortgages usually have?

Many private mortgages are short-term (often 6–12 months), designed as a temporary solution until you refinance or sell.

Can I get a private mortgage with bad credit?

Sometimes. Private lenders often focus primarily on equity and the exit plan, though credit and documentation can still influence pricing.

Do I have to pay fees again if I renew a private mortgage?

Often, yes. Many private mortgages are short-term, and when you renew (extend) or refinance with a private lender, you may be charged new fees, especially if it's treated as a new term or a new lender.

What typically happens:

• Same lender, simple extension: You may pay an extension/renewal fee (sometimes called a renewal or administration fee). It can be smaller than the original fee, but it's still common.
• Same lender, new underwriting or changed terms: You may be charged a new lender fee (or a higher renewal fee), particularly if the risk profile changed (higher LTV, missed payments, market changes).
• Switching lenders or going through a broker again: Expect new lender fees and potentially broker fees again, plus legal costs.

Tip: Before you sign the initial mortgage, ask what renewal fees could be and whether they're fixed, negotiable, or dependent on your LTV and payment history.