Mortgage solutions
Private Mortgage Lenders and Second Mortgages in Niagara
Private money is expensive, fast and built on equity. Used for twelve months with a clear exit, it can stop a power of sale or clear tax arrears. Used without one, it gets costly quickly.
Reviewed November 13, 2026 · Indicative figures, OAC
- Indicative private rates
- 8.99%–12.99%
- Typical term
- 1 year, interest-only
- Combined loan-to-value
- 65%–75% max
- Broker fee
- about 1.5%–3%
What private lending is, and is not
A private mortgage comes from an individual investor, a group of investors or a mortgage investment corporation (MIC) rather than a bank or trust company. Private lenders care first about the property and the equity in it, and second about income and credit. That is why they can approve files no institution will touch, often within days, and why they charge more.
In Niagara, private loans are usually one of three things: a first mortgage on a property that no bank or B-lender will finance yet, a second mortgage behind an existing first, or a short bridge between two transactions. Terms are almost always one year, interest-only, with combined borrowing capped at about 65% to 75% of value. Rates on today's indicative board run 8.99% to 12.99%, plus a lender fee and a broker fee.
A private mortgage is a tool for a specific problem with a known end date. It is not a long-term home for a mortgage, and if there is no believable way to repay it within a year or two, we will say so before anyone signs.
When private money makes sense in Niagara
- Stopping a power of sale. Missed payments on a first mortgage can lead to a notice of sale. A private second can bring the first current and cover legal costs while you sell on your own terms or rebuild for a refinance.
- CRA and HST arrears. Self-employed borrowers in West Lincoln, Wainfleet and Niagara Falls sometimes face collection on personal tax or HST. Clearing it quickly protects the business and removes a lien risk.
- Keeping a cheap first mortgage. If your first mortgage carries a low rate but your credit has slipped, a small second can be cheaper than refinancing the whole balance at a higher rate.
- Bridge financing. Buying in Grimsby or Fonthill before your Hamilton or Burlington home has closed, when your own lender will not bridge. See moving from the GTA to Niagara.
- Properties banks avoid. Homes needing major work, unusual rural parcels, some mixed-use buildings and properties with zoning questions. See century homes and commercial and multi-family.
- Construction completion. Finishing a build when draws have run short. See construction mortgages.
- Buying out a proposal or bankruptcy. Paying out a consumer proposal early so the credit rebuild can start. See consumer proposal mortgages.
What a private second really costs
Worked example: a $90,000 second mortgage on a Merritton home
A self-employed homeowner in Merritton, St. Catharines, owns a home worth about $530,000. Her first mortgage is $280,000 at 2.14% fixed with a big bank, maturing in 11 months. A slow year left her with about $42,000 owing to CRA and $38,000 on credit cards, and two late payments pushed her score to 560. A-lenders will not refinance her right now.
A private lender offers a $90,000 second mortgage at 10.99%, interest-only, for 12 months. Combined borrowing is ($280,000 + $90,000) ÷ $530,000 = 69.8% of value, inside the usual 75% ceiling.
| Item | Calculation | Amount |
|---|---|---|
| Monthly interest-only payment | $90,000 × 10.99% ÷ 12 | $824.25 |
| Interest over 12 months | $824.25 × 12 | $9,891 |
| Broker fee | 2.5% × $90,000 | $2,250 |
| Lender fee | 2.0% × $90,000 | $1,800 |
| Borrower's legal costs (estimate) | $1,500 | |
| Net funds after fees | $90,000 − $5,550 | $84,450 |
| Total 12-month cost | Interest plus fees | $15,441 |
That is 18.3% of the net funds received, which is expensive. The alternative was a B-lender refinancing the whole $370,000 at about 6.49%:
| B-lender refinance of $370,000 | Keep 2.14% first + private second | |
|---|---|---|
| Interest for one year | $24,013 | $5,992 + $9,891 = $15,883 |
| Penalty on the first mortgage | $1,498 (3 months' interest) | $0 |
| Lender and broker fees | $7,400 (about 2%) | $4,050 |
| Legal (estimate) | $1,500 | $1,500 |
| Total | $34,411 | $21,433 |
The private second costs about $12,978 less over the year, stops CRA collection and replaces $1,140 a month in minimum card payments (3% of $38,000) with one $824.25 interest payment. The exit: when the first mortgage matures in 11 months, with a year of on-time payments, she refinances both into one mortgage of about $370,000, which is 69.8% of value and inside the 80% refinance limit.
How private lenders decide
| Factor | What they look at | Niagara notes |
|---|---|---|
| Equity and location | Appraised value, combined LTV, how quickly the home would sell | Urban St. Catharines, Niagara Falls and Welland get the best terms; rural and waterfront parcels lower the LTV |
| Exit strategy | Refinance at maturity, sale or completion of a proposal | A clear date and a lender lined up for the takeout |
| Property condition | Roof, foundation, water and septic, insurance in place | Cistern and septic properties need tests; see rural properties |
| Ability to pay interest | Some income, or interest prepaid from the advance | Lenders may hold back several months of interest |
| Credit | Explanation more than score | Arrears to be paid from proceeds |
Regulation and disclosure in Ontario
Mortgage dealing in Ontario is regulated by FSRA under the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA). Your file is handled by an FSRA-licensed mortgage agent or broker, and the brokerage's licence number, compensation and any conflicts are disclosed to you in writing before you sign anything. On private files that means the rate, the lender fee, the broker fee, the term, any interest holdback and the total cost of borrowing are set out before you commit. You should always have your own real estate lawyer review a private mortgage, and you can check any agent's or brokerage's licence on the FSRA website.
If a lender or broker pressures you to sign the same day, asks for large fees in cash before a commitment, or will not put fees in writing, walk away.
Always plan the exit first
- Name the takeout. Refinance with an A-lender, a B-lender or a credit union at maturity, or sell. See B-lender mortgages and refinancing.
- Fix what caused the problem. File and pay taxes, make every payment on time and keep card balances low.
- Review at month eight. We check credit, value and income and start the takeout application three to four months before maturity.
- Compare against a HELOC. If your credit recovers early, a HELOC or home equity loan may replace the private second at a fraction of the cost.
Frequently asked questions
How much does a private mortgage cost in Ontario?
Indicative private rates run about 8.99% to 12.99%, usually interest-only for one year, plus a broker fee of about 1.5% to 3% and often a lender fee. On a $90,000 second at 10.99% with 4.5% in fees and $1,500 legal, the 12-month cost is about $15,441.
How much can I borrow on a private second mortgage?
Most private lenders cap combined borrowing, first and second mortgages together, at about 65% to 75% of the home's value. On a $530,000 home with a $280,000 first mortgage, 75% allows up to $117,500 more, subject to the property, location and exit plan.
Can a private mortgage stop a power of sale?
Often, if there is enough equity and time. A private loan can bring the first mortgage current and cover the lender's costs. It works best when started as soon as a notice arrives, because legal costs and arrears grow each week.
Are private mortgage lenders regulated in Ontario?
Mortgage brokering and lending in Ontario fall under FSRA and the MBLAA. The brokerage arranging your private mortgage must be licensed and must disclose its licence number, compensation, fees and any conflicts in writing before you sign. You should also have your own lawyer review the documents.
How do I get out of a private mortgage?
Usually by refinancing with a B-lender, an A-lender or a credit union once credit, income or the property issue has improved, or by selling. Plan the exit before you sign and start the takeout application three to four months before the private term ends.
Pre-approval & rate review
Get your Niagara mortgage numbers checked
Tell us where you are buying or what you owe. We reply by email, usually within one business day, with options from across the lender tiers.
- A licensed advisor reviews your numbers against A-lenders, Ontario credit unions and alternative lenders.
- Rate holds of up to 120 days on purchases and renewals (lender-dependent).
- On prime files the lender pays the brokerage, so there is no fee to you; any fee on alternative or private files is disclosed in writing first.
- Nothing goes to a lender or credit bureau until you say so.
Prefer email? Write to hello@mortgageniagara.com.