A private mortgage in Peterborough, ON, refers to a loan secured by real estate provided by an individual or a company that is not a traditional financial institution like a bank or credit union. These lenders are often called "C lenders" in the mortgage industry.

Private mortgages are typically sought out by borrowers who:

• Cannot qualify for a traditional mortgage: This can be due to a low credit score, inconsistent income (e.g., self-employed individuals, gig workers), high debt-to-income ratios, or recent bankruptcy/consumer proposal.
• Need fast funding: Private lenders can often approve and fund mortgages much quicker than banks, sometimes in days or weeks. This can be crucial in time-sensitive situations like avoiding a power of sale or securing a quick closing on a property.
• Have unique property types: Some properties, such as those that require extensive renovations, rural properties, or unconventional homes, might not meet traditional lenders' strict criteria.
• Need short-term financing? Private mortgages are often used as a bridge solution while borrowers work to improve their financial situation so that they can qualify for a traditional mortgage in the future.
• Want to access home equity quickly: For homeowners with significant equity, a private mortgage can be a fast way to get a lump sum for debt consolidation, renovations, or other needs.

How Private Mortgages Work:

• Equity-based lending: Private lenders primarily focus on the value of your property and the amount of equity you have in it, rather than solely on your income and credit history. They typically lend up to a certain Loan-to-Value (LTV) ratio, often around 75%. This means you usually need at least 25% equity in your home (for a first mortgage, or more for a second mortgage).
• Higher Costs: Because they take on more risk, private mortgages have higher interest rates than traditional bank mortgages. While bank rates might be in the 4-6% range (as of June 2025), private mortgage rates can range from 7% to 15% or more, depending on the risk level, LTV, and property type.
• Additional Fees: Expect various fees, including:
  • Lender fees: Typically, 1% to 4% of the mortgage amount, paid upfront.
  • Broker fees often match the lender fees, which are also paid upfront.
  • Appraisal fees: To determine the property's value.
  • Legal fees: These are for preparing and registering the mortgage.
• Shorter Terms: Private mortgages are usually short-term solutions, often with terms of 6 months to 3 years (most commonly 1 year). This means you'll need an "exit strategy" to repay the loan, refinance with a traditional lender, or renew the private mortgage at the end of the term.
• Interest-Only Payments: Many private mortgages are structured as interest-only payments, meaning your monthly payments only cover the interest, and you are not paying down the principal balance. This can help keep monthly payments lower, but the principal is still owed at the end of the term.

Pros of Private Mortgages:

• Easier Qualification: More flexible lending criteria, focusing on property equity.
• Faster Approval and Funding: Quick access to funds for urgent needs.
• Flexible Terms: Lenders may be more open to negotiating terms that suit your situation.
• Opportunity to Rebuild Credit: Can be a stepping stone to improving your credit history and qualifying for a traditional mortgage later.

Cons of Private Mortgages:

• Higher Interest Rates: Significantly more expensive than traditional mortgages.
• Additional Fees: Can add substantially to the overall cost.
• Shorter Terms: Requires a clear exit strategy and re-evaluation frequently.
• Interest-Only Payments: You may not pay the principal, meaning the full amount is due at the end of the term.
• Less Regulation: While licensed mortgage brokers are regulated by FSRA (Financial Services Regulatory Authority of Ontario), private lenders have fewer direct regulations than banks. Hence, it's crucial to work with a reputable broker.
• Higher Risk of Default: Due to the higher costs and shorter terms, there's a greater risk if your financial situation doesn't improve as planned.

Finding a Private Mortgage Lender in Peterborough, ON:

The best way to secure a private mortgage is to work with a licensed mortgage broker specializing in this lending type. They have networks of private lenders and can help you navigate the process, ensuring you understand all the terms and costs.

Choosing The Right Mortgage Broker Makes All the Difference—Experience Matters!

With over 30 years of experience in finance, Mike Cara, your Ontario Trusted and Top-Rated Mortgage Broker in Peterborough, specializes in helping clients that most other brokers cannot help.

Mike Cara, Mortgage Broker in Peterborough:

Full-service mortgage business arranging financing for "all credit types."

Their office is at 398 McDonnel St., Unit 4, Peterborough, Ontario, K9H 2X4.

Important Advice:

If you are considering a private mortgage in Peterborough, always:

1. Work with a Licensed Mortgage Broker: This is crucial for your protection and to ensure you get a fair deal. They are regulated by the Financial Services Regulatory Authority of Ontario (FSRA).
2. Understand All Costs: Before signing anything, get a clear breakdown of the interest rate, lender fees, broker fees, and any other associated costs.
3. Have an Exit Strategy: A private mortgage should be a temporary solution. Plan how to transition to a more affordable, traditional mortgage or pay off the loan before the term ends.
4. Read the Fine Print: Carefully review the mortgage agreement with your legal counsel before committing.

While private mortgages are more expensive, they can be a valuable tool for individuals and families in Peterborough facing unique financial challenges or needing fast access to funds. They can provide a bridge to a stronger financial future.