Rates, Fees & Facts — What Private Mortgages Actually Cost
Private mortgage costs are different from bank mortgages. This page explains every component — rates, fees, and total cost of borrowing — so you can evaluate your options clearly.
Rate ranges
Understanding private mortgage rates
Private mortgage rates are higher than bank rates — and for good reason. Here is what drives them.
Residential deals: typically 7–14% annually
The range reflects the wide spectrum of deals. A low-LTV property in a strong urban market may approach the lower end; a high-LTV situation with credit challenges sits toward the higher end.
Why not bank rates?
Banks lend to borrowers who fit narrow qualification criteria. Private lenders take on deals banks won't — and price accordingly. The higher rate is the cost of accessing capital outside standard channels.
Interest-only is standard
Most private mortgages are structured as interest-only. This keeps monthly payments lower and reflects the short-term, bridge nature of the loan.
Rate is set per deal
There is no posted rate for private mortgages. Each transaction is priced based on its individual risk profile, property, LTV, and borrower circumstances.
Indicative rate ranges
7% – 10%
LTV under 65%, clean property
10% – 12%
LTV 65–75%, some credit considerations
12% – 14%+
Higher LTV, credit events, non-urban
Varies significantly
Assessed on a deal-by-deal basis
Rates shown are indicative ranges for general information only. Your actual rate will depend on property type, location, loan-to-value ratio, borrower profile, and other underwriting factors. Rates are subject to change without notice.
Fee breakdown
Every fee, explained
Private mortgages involve several distinct fee types. Understanding each one helps you budget accurately and avoid surprises.
Lender Fee
Typically 1–3% of the loan amountCharged by the private lender for providing the mortgage funds. This fee compensates the lender for underwriting risk, due diligence, and committing capital. It is deducted from the loan proceeds at closing.
Illustrative example: On a $300,000 mortgage, a 2% lender fee = $6,000.
Broker Fee
Typically 1–2% of the loan amountCharged by the mortgage brokerage for sourcing, structuring, and placing the mortgage with a suitable lender. Covers deal analysis, lender matching, documentation, and coordination through to funding.
Illustrative example: On a $300,000 mortgage, a 1.5% broker fee = $4,500.
Legal Fees
Typically $1,500–$3,000+Both borrower and lender require independent legal counsel to review and register the mortgage. Legal fees vary by transaction complexity, property type, and jurisdiction. Budget for both sides.
Illustrative example: A straightforward residential deal may cost $1,800–$2,200 total.
Appraisal Fee
Typically $300–$500+ (residential)An independent appraisal confirms the property's current market value. Required by virtually all private lenders. Cost varies by property type, size, and location. Specialty properties cost more.
Illustrative example: Urban residential appraisals often fall in the $350–$450 range.
All fees are disclosed in writing before you commit to proceeding. You will receive a cost breakdown for review prior to any commitment. Fee ranges above are illustrative — your specific transaction will have individualized fee disclosure.
Total cost of borrowing
The real number you need to know
Rate alone doesn't tell you what a mortgage costs. Total cost of borrowing includes everything — interest, all fees, and any other charges.
On a short-term private mortgage, the upfront fees often represent a significant portion of total cost — sometimes more than the interest itself. A $300,000 loan at 10% for 6 months generates $15,000 in interest. Add $10,000+ in fees and the total cost of borrowing is $25,000 or more.
This is not a reason to avoid private mortgages when they are needed — but it is a reason to understand the full picture before deciding. Our calculators let you model different scenarios so you can evaluate your options with real numbers.
Illustrative total cost — $300,000 loan, 10%, 6 months
Illustrative example only. Numbers used are not offers or quotes. Actual costs depend on your specific deal. This calculator provides estimates only and does not constitute a mortgage offer, pre-approval, or commitment. Actual rates, terms, and eligibility depend on a full review of your application. Consult a licensed mortgage professional for personalized advice.
Key concepts
Rate vs APR vs total cost of borrowing
These three numbers measure the same mortgage differently. Understanding each one prevents misunderstanding.
Interest Rate
The annualized percentage applied to the outstanding principal to calculate interest charges. For a $200,000 mortgage at 10%, annual interest = $20,000.
Useful for comparing interest charges between options.
Annual Percentage Rate (APR)
A standardized rate that includes the interest rate plus certain fees, expressed as an annual rate. APR gives a more complete picture of cost than the interest rate alone.
Required disclosure in Canadian mortgage transactions. Allows apples-to-apples comparison.
Total Cost of Borrowing
All dollars you spend to obtain and repay the mortgage: interest paid over the full term, all upfront fees, legal costs, and appraisal. The most complete measure of what the mortgage actually costs you.
The number to use when deciding whether private financing is appropriate for your situation.
Rate determinants
What affects your rate
Every factor below influences how a private lender prices risk. Understanding them helps you set realistic expectations.
Loan-to-Value (LTV)
The ratio of your mortgage balance to the property's appraised value. Lower LTV means the lender has more equity cushion, typically resulting in better rates. Most private lenders cap at 75–80% LTV.
Property Type & Condition
Residential single-family homes in good condition are the most preferred. Multi-unit, commercial, rural, or vacant land properties carry higher rates due to reduced marketability or liquidity.
Location
Urban Ontario markets with strong demand and stable values attract lower rates. Remote, rural, or specialty locations increase lender risk and typically result in a rate premium.
Credit Profile
Unlike banks, private lenders do not use hard credit cutoffs. However, your credit history is reviewed as context. Severe recent issues (bankruptcy, multiple NSFs) may influence terms.
Exit Strategy
Lenders want confidence you can repay or refinance at term end. A credible plan — sale of property, refinance to institutional, income stabilization — can positively affect rate and approval.
Term Length
Private mortgages are typically 6–24 months. Shorter terms with strong equity may attract lenders willing to offer better pricing. Longer terms may carry slight premium for the extended commitment.
Fee structures
Common fee structure examples
The table below shows illustrative fee structures for three loan sizes. These are examples to help you budget — not quotes or offers.
| Fee Component | Example A | Example B | Example C |
|---|---|---|---|
| Loan Amount | $200,000 | $350,000 | $500,000 |
| Lender Fee (2%) | $4,000 | $7,000 | $10,000 |
| Broker Fee (1.5%) | $3,000 | $5,250 | $7,500 |
| Legal (est.) | $2,000 | $2,500 | $3,000 |
| Appraisal (est.) | $400 | $450 | $500 |
| Total Est. Upfront Fees | $9,400 | $15,200 | $21,000 |
Illustrative examples only. Actual fees depend on your specific transaction, lender requirements, and local legal costs. Examples assume 2% lender fee and 1.5% broker fee. Legal and appraisal are estimates. Rates shown are indicative ranges for general information only. Your actual rate will depend on property type, location, loan-to-value ratio, borrower profile, and other underwriting factors. Rates are subject to change without notice.
Rate & Fee Disclaimer
Rates shown are indicative ranges for general information only. Your actual rate will depend on property type, location, loan-to-value ratio, borrower profile, and other underwriting factors. Rates are subject to change without notice.
All mortgage transactions are subject to lender approval, satisfactory appraisal, and legal review. Past results do not guarantee future outcomes.
Model your costs before you commit.
Use our calculators to estimate your monthly payments, total fees, and total cost of borrowing — then speak with a licensed professional for your specific scenario.