Question 1

How much does a private mortgage really cost in Ontario?

Accepted Answer

Judge a private mortgage on its total cost of borrowing, not the interest rate. Alongside the rate you should expect a lender fee and a broker fee (usually charged as a percentage of the loan and deducted on closing), your own legal fees, the lender's legal fees, and an appraisal or site evaluation. Add those to the interest you will pay over the term, then divide by the number of months you actually need the money. That monthly number is the real cost, and it is the only fair way to compare one private offer against another. Ask for every fee in writing before you commit, ask whether the fees are paid up front or added to the mortgage, and ask what a renewal would cost if your exit takes longer than planned. Most private mortgages in Ontario are one- or two-year interest-only terms, so the exit plan matters as much as the pricing.

Question 2

Can I get a mortgage if I'm self-employed in Ontario?

Accepted Answer

Yes. Being self-employed does not disqualify you — it changes how your income is proven. Bank (A) lenders normally want two years of filed returns and Notices of Assessment and use your Line 150 net income, which is exactly the number good tax planning keeps low. B lenders will look at bank statements, business deposits and add back items like depreciation, so more of what your business actually earns counts. Private lenders care mostly about the property and the equity behind it, and are the short-term option when timing or credit gets in the way. Practical steps: keep two years of business bank statements clean and consistent, be ready with your Articles of Incorporation or a business licence, avoid writing off every last dollar in the two years before you buy, and get your file reviewed before you make an offer so you know which lender tier fits.

Question 3

Is a CHIP reverse mortgage right for me?

Accepted Answer

Sometimes. A reverse mortgage lets homeowners 55 and older draw on their home equity with no required monthly payments, you stay on title, and the No Negative Equity Guarantee means you never owe more than the fair market value of the home when it is sold on the usual terms. CHIP is the best-known product in Canada, but it is not the only reverse mortgage lender, and it is not automatically the cheapest. It fits when you plan to stay in the home for many years, cash flow is tight, and you cannot service a regular payment. It usually does not fit when you only need the money for a year or two, when you can comfortably carry a payment, or when a HELOC, a refinance or a short-term second mortgage would cost far less over the period you actually need. The honest test is simple: how long will the money be outstanding, and what does each option cost over that same period? Ask to see reverse and non-reverse options side by side before you decide, and involve your family and your own legal or tax advisor.

Question 4

My bank declined my mortgage — what are my options?

Accepted Answer

A decline is a policy decision at one lender, not a verdict on your file. First find out exactly why: income that cannot be proven the bank's way, debt ratios above their cap, a credit blemish, the property type, or a stress-test shortfall. Then match the reason to the right lender tier. B lenders (trust companies and credit unions) accept broader income proof and higher ratios in exchange for a slightly higher rate and a lender fee. Private lenders look mainly at the equity in the property and work for short-term situations — a closing date to save, taxes or arrears to clear, or a credit rebuild — with a planned exit back to a bank in one to two years. Credit unions are also worth a look because they are not bound by the federal stress test in the same way. Ask for the decline reason in writing, avoid firing off more applications that each add a credit inquiry, and get one broker to place the file properly.

Question 5

3 questions to ask before you sign a private mortgage (it isn't the rate)

Accepted Answer

All right, there's three things that you need to consider when you get into a private mortgage contract, and it's not the interest rate. The first thing that you want to ask yourself is what is my total cost of borrowing? That means what are the upfront legal fees? What are the upfront lending fees? What are the upfront broker fees? And what are the upfront appraisal or site evaluation fees? If the mortgage is for 12 months, what am I going to do in 12 months time to repay this entire loan? If you do not have a solid plan of action, stop right there because it means that this product is probably not suitable for you. That brings me to my third and final thing that you need to consider when you get a private mortgage is if I'm unable to repay this debt after the 12 month period or 24 month period, what are my obligations? Will the lender renew? And if the lender will renew, what is the cost to renew? Do I have to pay these costs upfront? Are they added into the mortgage? And if you and your advisor cannot answer these three things with clarity, stop, go back to the drawing board and restart your planning process.

Question 6

Why private mortgage renewals are getting stuck in Ontario right now

Accepted Answer

These guys who have taken private mortgages and the equity in those properties has come down and they're just having to renew and having to renew and those private lenders are also stuck because if they force a power of sale, what are they going to get? They're not going to get much out of it anyways. So we are seeing a lot of distress and we're seeing a lot of litigation as well from private lenders who are not really knowing what to do because some properties are underwater and they've still got a loan out there and the exit strategy that we call the ability for that homeowner to exit is usually to refinance or to sell. If you're selling and you're underwater, you don't achieve that and you can't refinance because there's not enough equity behind you anyways. So it's kind of tricky for some of those guys who have bought homes or even lent out monies in like 2022, 2021.

Mortgage video FAQ: straight answers to the questions we hear every week