The four pieces of a private mortgage's total cost
When you look at any private mortgage offer in Ontario, the full cost comes from four moving parts. Understanding each one lets you compare apples to apples.
1. Interest rate
Most Ontario private first mortgages in 2026 are priced in the high single digits, while second mortgages typically run between roughly 9% and 14% per year. The exact rate depends on the lender's risk view — loan-to-value, property type, location, and your overall picture. These are general market ranges, not Future Lending Group's rates; we are a referral service, not a lender.
2. Lender fee
Private lenders almost always charge a one-time lender fee, typically 1%–3% of the loan amount, deducted from the funds you receive at closing. This compensates the lender for sourcing, underwriting, and funding a short-term, equity-based loan.
3. Broker or referral fee
If a licensed mortgage brokerage arranged your private mortgage, they may charge a brokerage fee on top of the lender fee. Always ask for a written breakdown of every fee before you sign.
4. Legal and appraisal costs
You'll typically pay for an appraisal (often $400–$700) and your own lawyer to close the mortgage (commonly $1,200–$2,500 for a private mortgage, depending on complexity).
What "normal" looks like — a worked example
Say you're looking at a $100,000 second mortgage on a property with strong equity in the Greater Toronto Area:
- Interest rate: around 10%–12% per year, interest-only payments
- Lender fee: $1,500–$3,000 (1.5%–3%)
- Legal + appraisal: roughly $1,800–$3,000
Net funds in your hand would be the loan amount minus fees deducted at closing.
Why private is more expensive than a bank
Private lenders take on risk banks won't — bruised credit, complex income, tight timelines, properties that fall outside bank guidelines. The rate and fees reflect that risk. The trade-off is speed, flexibility, and equity-based qualification.
How to keep costs down
- Borrow only what you need. Lender fees scale with loan size.
- Treat it as short-term. Use the time to rebuild credit or restructure income, then refinance to a B- or A-lender.
- Get every fee in writing before signing a commitment.
- Compare more than one offer. Private mortgage pricing varies more than bank pricing.