What Is a Private Mortgage in Canada? (2026 Guide)

A private mortgage is a loan secured against your home from a private lender — an individual, a group of investors, or a Mortgage Investment Corporation (MIC) — rather than a bank. It exists for situations the banks can't or won't approve, and it's priced accordingly. Here's how private mortgages actually work in Canada in 2026. See private mortgage options.

The short answer

A private mortgage is short-term, equity-based financing: approval rests mostly on how much equity you have in the property, not your credit score or income. In exchange for that flexibility you pay a higher rate (commonly 8%–12%+ in 2026) plus a lender fee of roughly 1%–3%, usually on a one-year term. It's a bridge to a better solution, not a place to stay.

How a private mortgage works

Private lenders care about one thing above all: the equity protecting their loan. Most cap total borrowing at around 75%–80% loan-to-value (lower in rural or unique properties). Because the security is strong, they can overlook bruised credit, unprovable income, tax arrears, or a recent life event that a bank algorithm rejects automatically. You typically make interest-only payments for the term, then repay or refinance at the end.

When a private mortgage makes sense

• Credit repair in progress — you need 12 months to rebuild before a bank will approve (how to rebuild credit for a mortgage).
• Self-employed with hard-to-document income — your business is healthy but your tax returns understate it (self-employed mortgage options).
• Stopping a power of sale or foreclosure — you need fast capital to cure arrears and protect the home (how to stop a foreclosure).
• CRA or property-tax arrears — you need to clear a lien before a lender will refinance (removing a CRA lien).
• A short bridge — a deal that closes in months once one piece falls into place.

What it costs — and why

Private money is expensive because it's patient and flexible where banks aren't. Expect a rate well above bank pricing, a one-time lender fee, plus broker, legal, and appraisal costs. The right way to judge the cost isn't the rate alone — it's the total cost over the months you actually need it, against what the private mortgage lets you do (save the house, rebuild credit, close the deal). A year of higher interest can be far cheaper than losing a property.

The exit plan is everything

A good broker won't put you in a private mortgage without a clear way out. Before you sign, you should know exactly how you'll exit: rebuild credit and move to an A or B lender, refinance once a lien is cleared, sell, or complete the event the bridge was for. Going in without an exit is how short-term financing becomes a long-term trap. See where private fits in the lender ladder in A lender vs. B lender vs. private.

Private mortgage vs. bank vs. B lender

• A lender (bank/monoline) — lowest rates, strict qualifying, full income and credit review.
• B lender (alternative) — moderate rates plus a ~1% fee, flexible on income and credit, still wants a real story.
• Private lender / MIC — highest rates and fees, fastest and most flexible, equity-driven, short term (what a MIC is).

Frequently asked questions

What credit score do you need for a private mortgage in Canada?

There's often no minimum — private lenders approve on equity, not credit. People with collections, judgments, or recent bankruptcy can still qualify if the loan-to-value is conservative enough.

How much can I borrow with a private mortgage?

Most private lenders go up to about 75%–80% of the property's value, including any existing mortgages that stay in place. The stronger your equity, the better the rate and fee.

Are private mortgages safe?

They're a legitimate, regulated form of lending used every day in Canada — but only as a short-term tool with a clear exit. The risk is staying in one too long. Always work through a licensed broker who shows you the full cost and the way out.

How long does a private mortgage last?

Usually one year, sometimes up to two, with interest-only payments. The goal is to refinance into a cheaper A or B mortgage as soon as you qualify.

Need financing the bank can't do? We'll tell you honestly whether a private mortgage is the right bridge — and build the exit plan with you. Explore private mortgage options or see all mortgage solutions.