When a private mortgage makes sense in Toronto
Toronto's price points mean the gap between what a bank will approve and what a purchase or refinance actually needs comes up more often here than almost anywhere else in the GTA. A private mortgage can bridge that gap — here's when it genuinely makes sense.
What a private mortgage actually is
A private mortgage is financing from an individual or private lending company instead of a bank or credit union. It's secured against your property the same way a conventional mortgage is, but the lender is underwriting the equity and the property, not running your file through the same rigid approval box a bank would. That makes it an option when a bank has said no — not a replacement for conventional financing when conventional financing is available and cheaper.
Speed
Private lenders focus on the property and your equity, not a lengthy underwriting file — funding in days rather than weeks is common.
Flexible qualification
Approval leans on home equity and exit strategy rather than a perfect credit score or traditional income documentation.
A bridge, not a life sentence
Most private mortgages are short-term (6 months to 2 years) — a bridge to a specific goal, then refinanced back to a conventional lender.
Who in Toronto typically uses one
Condo owners near CMHC insurance thresholds
When a purchase price or refinance amount sits right at an insurance or qualification cutoff, a private second mortgage can cover the gap without restructuring the whole deal.
Self-employed downtown professionals
Consultants, freelancers, and business owners whose T1 income doesn't reflect their actual cash flow often get a faster, more realistic look from a private lender than from a bank underwriting box.
Buyers needing bridge financing between closings
Toronto's competitive resale market sometimes means buying before selling — a short-term private mortgage can cover the overlap.
Homeowners consolidating high-interest debt without breaking a low-rate first mortgage
A private second mortgage behind your existing Toronto mortgage can roll high-interest debt into one payment without touching your first mortgage's rate or term.
Worth knowing upfront
Private mortgages typically carry higher rates and fees than bank financing — that's the tradeoff for speed and flexible qualification. They almost always make more sense as a short-term bridge with a clear exit plan (a sale, a refinance, or an improved credit file) than as a long-term solution. I'll walk you through the real numbers before you decide anything.
See all mortgage services in TorontoCommon questions
Are private mortgage rates higher in Toronto than the rest of the GTA?
Rates are driven more by the property, the loan-to-value, and the borrower's exit strategy than by which GTA city the property is in. Toronto's higher average property values can mean larger loan amounts, but the rate mechanics are the same across the region.
Can I get a private mortgage on a Toronto condo?
Yes, though some private lenders are more selective about condos than freeholds due to reserve fund and building-specific factors. I work with lenders who are comfortable with condo security when the numbers make sense.
How is this different from just refinancing my Toronto mortgage?
A private mortgage sits behind your existing first mortgage as a second mortgage, so your current rate and term stay untouched. A refinance replaces your first mortgage entirely and may trigger a prepayment penalty if you're still mid-term.