What is Private Mortgage?
A private mortgage is a home loan offered by a private lender, rather than a traditional bank or financial institution. It’s commonly used by borrowers who may not qualify for conventional mortgage financing due to challenges like poor credit, low income, or recent financial setbacks.
Private mortgages are a flexible solution for homeowners looking to access home equity, cover urgent expenses, or consolidate debt—especially when traditional lenders decline their applications. While they typically carry higher interest rates and lender fees, private mortgages offer faster approval processes and customized terms based on individual circumstances.
With the right structure and a solid exit strategy, a private mortgage can help you retain ownership of your property, improve cash flow, and take advantage of future real estate appreciation.
Benefits
Access to Cash
Use the equity in your home through a private mortgage to secure funds for major expenses like renovations, education, or debt consolidation—without needing to sell assets or disrupt your long-term financial plans.
Flexible Terms
Select private mortgage terms that suit your financial goals. Whether you require short-term cash flow or a longer-term repayment plan, flexible options are available to help you manage your finances with ease and confidence.
Alternative Financing
Private mortgages are a smart option when banks say no. Ideal for those with unique financial situations or past declines, they offer flexible solutions when traditional lenders aren’t an option.
No Need to Refinance
Get extra financing through a private mortgage without changing your current mortgage. Maintain your existing terms while covering new financial needs—making it easier to manage both old and new obligations.
When Is a Private Mortgage Right for You?
Private lending can be ideal for:
- First-time buyers turned down by banks
- Real estate investors needing bridge loans
- Homeowners needing second mortgages or debt consolidation
- Canadians in foreclosure or power of sale situations
Run numbers on My Debt Consolidation Calculator
Also read: consumer education campaign on private mortgages
FAQs
What are the risks of a private mortgate?
A private mortgage comes with higher interest rates and fees compared to regulated financial institutions. Considering the total cost and your ability to make payments is essential.
How much can I borrow wiht a private mortgage?
In most cases, you can borrow up to 80% of your property’s value. However, the amount can vary based on your specific financial situation.
What’s the difference between a private and a traditional mortgage?
The main differences between private and traditional mortgage lenders lie in lending criteria, processing speed, flexibility, and interest rates. Traditional lenders typically have stricter requirements, focusing heavily on credit scores and stable income.
Can I use a second mortgage for debt consolidation?
Many homeowners use private mortgages to consolidate higher-interest debts into one lower monthly payment and improve cash flow.
How do I qualify for a private mortgage?
In most cases, private mortgage lenders rely heavily on the appraisal with respect to marketability, value, and overall condition. Unlike banks, private lenders place less emphasis on credit scores and incomes, and more emphasis on the exit strategy as these are intended to be short-term solutions.