A private mortgage may be worth considering when you have a specific financing need, traditional options do not fit your current circumstances, and you have a workable plan to repay the loan. Having equity in a GTA property is only part of the decision. The arrangement also needs to make sense for your budget, its total cost and what happens when the term ends.

Before you accept an offer, ask a simple question: will this financing help resolve the problem, or leave you facing the same problem with more debt? This guide helps Ontario homeowners prepare for that conversation.

What is a private mortgage?

A private mortgage is borrowing secured against real estate, with funding from a private lender. The Mortgage Providers arranges mortgage financing as a brokerage; the mortgage commitment identifies the proposed lender and its conditions. You can read more about our private mortgage services in the GTA.

Ontario’s Financial Services Regulatory Authority, or FSRA, describes private mortgages as generally temporary arrangements. They can carry higher borrowing costs and may require interest-only payments. With an interest-only payment, the principal is not being paid down. Those features make the repayment plan especially important. See FSRA’s private mortgage guidance.

When might a private mortgage be worth reviewing?

Your circumstances do not fit a traditional lender’s criteria

Credit concerns, changes in income or a financing request that needs closer assessment may lead you to explore other lenders. Start by finding out why the original application did not work. Is there missing information, a debt issue or a borrowing amount that needs to change?

A bank decline should lead to a careful review, not an automatic move into private financing. Ask the brokerage to explain the available alternatives and why a proposed arrangement fits your circumstances. Self-employment or a past credit problem does not, by itself, establish which mortgage is appropriate.

You need to compare refinancing with additional secured borrowing

A homeowner seeking funds may consider replacing an existing mortgage or adding a second mortgage. These approaches create different obligations. A second mortgage leaves the first mortgage in place, so both commitments need to be manageable. Review our first and second mortgage information before discussing the options.

Replacing a mortgage before its term ends may involve a prepayment penalty and other charges. Ask your current lender for the actual payout cost rather than estimating it from the balance alone. FCAC explains what to consider when breaking a mortgage contract.

You are considering using property equity to repay other debts

Mortgage-based consolidation can change how you repay credit cards or other balances. It also means putting debt against your property. A lower monthly payment is not enough to show that the arrangement saves money or is suitable.

Compare the total borrowing costs, the remaining balance and the repayment period. Include a plan to avoid rebuilding the debts you pay off. FCAC’s home-equity borrowing guidance explains the importance of understanding costs and the risk to your home.

Four questions to answer before proceeding

1. What problem does the loan actually solve?

Write down the amount needed, its purpose and your deadline. Be specific: “repay these listed balances” gives your broker a clearer starting point than “access some equity.” Explain what happens if you borrow less, delay the transaction or choose another approach.

2. What will you receive and what will you owe?

Request a written breakdown of the proposed advance, deductions, interest and applicable fees. Identify who receives each fee and when it is payable. The approved mortgage amount and the funds available for your intended purpose may differ.

FSRA emphasizes clear fee explanations, including renewal costs. Ask the brokerage to walk through the figures with you. Its guidance on transparent mortgage disclosures explains why a headline borrowing figure alone is insufficient.

3. Can you manage the full household commitment?

Prepare a budget that includes every mortgage payment, property taxes, insurance, condominium fees where applicable and ordinary living expenses. Then ask what happens if income falls or an unexpected repair arrives.

Do not treat approval as a replacement for this exercise. FSRA’s mortgage shopping guidance encourages borrowers to assess affordability, future changes and the contract’s risks.

4. How will you repay the mortgage at maturity?

An exit strategy should identify a realistic repayment route and the steps needed to achieve it. If the plan is refinancing, what must change about income, debt or credit? If it is a sale, does the current equity support repayment after costs?

FSRA cautions against relying on speculative property-price growth. A plan to refinance also needs more substance than hoping another lender will approve the file later. Read its explanation of realistic private mortgage exit strategies.

Want help organizing these questions? Contact The Mortgage Providers with your property location, financing purpose and timing. Start with a review of the situation before deciding on a product.

An example of what a useful review looks like

Illustrative scenario, not an actual client case: a Vaughan homeowner wants to consolidate debt while keeping an existing first mortgage. They intend to repay any new private borrowing through refinancing later.

The useful conversation starts with questions. What is the combined payment? Which debts will actually be paid? What fees reduce the available funds? What evidence supports the future refinance, and what is the fallback if it does not happen?

The same questions may reveal that a smaller loan, a different arrangement or postponing additional borrowing deserves consideration. The purpose of the review is to assess the proposal, not to assume private financing is the answer.

When should you pause?

• You cannot explain how the mortgage will be repaid at the end of its term.
• The budget depends on income or a property value increase that is uncertain.
• You are focusing on the payment while overlooking fees and the balance still owing.
• You feel rushed to sign documents you do not understand.
• The plan depends on repeatedly renewing without addressing the original borrowing problem.

FSRA illustrates how remaining in private financing can erode equity when costs accumulate. Its private mortgage exit example is a reminder to discuss the end of the loan before committing to its beginning. A future renewal or refinance should never be treated as certain.

What to bring to the first conversation

You do not need to guess which product you qualify for before contacting a brokerage. Prepare a useful summary, then ask what documentation is required for your specific file.

• Your property location, type and whether you live there or rent it out.
• Current mortgage balances, payments and maturity dates.
• The amount you need, its purpose and any deadline.
• A summary of income, other debts and monthly expenses.
• Any missed payments, tax arrears or other concerns affecting the request.
• Your intended repayment route and the evidence supporting it.

Whether the property is in Toronto, Mississauga, Markham or elsewhere in the GTA, describe the actual property and circumstances. Avoid assuming that a neighbour’s financing arrangement will also be available to you.

Frequently asked questions

Does home equity guarantee a private mortgage approval?

No. Property equity is one consideration. A lender’s assessment and the suitability of the proposed arrangement also matter. The property, existing borrowing, costs and repayment plan need to be reviewed together.

Is a private mortgage always a second mortgage?

No. “Private” describes the funding source. “First” and “second” refer to the mortgage’s priority against the property. Ask how the proposed loan would sit alongside any existing mortgage.

Can a private mortgage help with debt consolidation?

It may be considered, but it does not erase debt. Review the complete cost, the new secured obligations and how you will avoid building the paid-off balances again. It is not suitable for every homeowner.

Can a self-employed borrower ask about private financing?

Yes. Explain how the business earns income and what documents are available. Being self-employed does not automatically mean private financing is necessary or that an application will be approved.

Should I assume I can renew when the term ends?

No. Discuss maturity well in advance. Renewal availability and terms require review. Your initial plan should also consider what happens if the expected refinance or renewal is unavailable.

Does choosing private financing guarantee a quick closing?

No. Ask what conditions and documents remain outstanding. Do not make commitments based on a general speed claim. Confirm the proposed funding timeline with the professionals handling your transaction.

Discuss your GTA property and financing needs

The next step is a conversation about the property, the reason for borrowing and how repayment would work. Speak with The Mortgage Providers to review your circumstances and confirm what information is needed. A suitable mortgage decision should account for what happens after the funds arrive.

Sources and information date

Source information checked October 15, 2026. The linked FSRA and Financial Consumer Agency of Canada resources throughout this article provide further information. This source check does not represent a personalized mortgage assessment.