A private mortgage in Ontario typically costs between 9% and 18% in true annual percentage rate (APR) when you account for all fees, not just the advertised interest rate. On a $500,000 private mortgage at a 10% interest rate with standard fees, a borrower should expect to pay approximately $65,000 to $75,000 in total cost of capital over a 12-month term. This includes interest charges, lender fees, broker fees, legal costs, appraisal fees, title insurance, and discharge fees. The advertised rate tells only part of the story. Understanding your true APR — the single number that captures all borrowing costs — is the most important step you can take before signing with any private mortgage lender or broker in Ontario.
Why Does the Advertised Interest Rate Not Tell the Full Story?
The interest rate on a private mortgage is the number most borrowers focus on first. It is also the number that hides the most.
A private mortgage lender advertising a 10% interest rate may sound straightforward. But when you add a 2% lender fee, a 1% broker fee, $2,500 in legal costs, a $400 appraisal, and $300 in title insurance, the true cost of borrowing — your APR — can climb to 14% or higher on a 12-month term.
This gap between the advertised rate and the true APR is where borrowers get caught. It is also where the private mortgage industry has historically lacked transparency.
At Private Mortgages Canada, we believe borrowers deserve to see the complete picture before they commit. That is why we disclose the full cost structure of every deal upfront and provide an APR calculator that shows you the real number, not just the headline rate.
Here is every cost component you should understand.
What Are the Cost Components of a Private Mortgage in Ontario?
A private mortgage in Ontario carries six to eight distinct cost components beyond the interest rate itself. Each one adds to your total cost of capital, and each one should be disclosed to you in writing before you sign a commitment letter.
Interest Rate: 7% to 14%
Private mortgage interest rates in Ontario typically range from 7% to 14%, depending on the loan-to-value (LTV) ratio, property type and location, the strength of the exit strategy, and the risk profile of the deal.
Key factors that influence your rate:
- LTV ratio. Lower LTV (more equity) generally means a lower rate. A first mortgage at 50% LTV may qualify for 7-9%, while a second mortgage at 75% combined LTV may be 10-12%.
- Property type. Urban residential properties in the GTA, Ottawa, or Hamilton typically command lower rates than rural or commercial properties.
- Term length. Shorter terms (6-12 months) may carry slightly lower rates than longer terms (18-24 months), depending on the lender.
- Exit strategy viability. A clear, documented exit plan — such as a refinance to conventional financing within 12 months — signals lower risk to the lender, which can translate to a lower rate.
Interest is typically calculated monthly, not in advance. On a $500,000 mortgage at 10%, monthly interest payments are approximately $4,167.
Lender Fees: 1% to 3% of Loan Value
Most private lenders charge an upfront fee, often called a lender fee, commitment fee, or origination fee. This is typically 1% to 3% of the total loan amount, deducted from the mortgage advance at funding.
On a $500,000 mortgage:
- 1% lender fee = $5,000
- 2% lender fee = $10,000
- 3% lender fee = $15,000
This fee is the single largest non-interest cost in most private mortgage transactions. It is also the cost that varies most between lenders and is most frequently misunderstood by borrowers.
Some lenders structure this as a flat dollar amount. Others calculate it as a percentage. Either way, it should be disclosed to you clearly in the commitment letter, and it must be included in any APR calculation to give you a true comparison between lenders.
Broker Fees: Typically 1% to 2%
If you are working with a mortgage broker (as you would with Private Mortgages Canada, which is an FSRA-licensed brokerage), the broker charges a fee for sourcing, structuring, and placing the mortgage. This fee typically ranges from 1% to 2% of the loan amount.
On a $500,000 mortgage:
- 1% broker fee = $5,000
- 2% broker fee = $10,000
Under FSRA (Financial Services Regulatory Authority of Ontario) regulations, your mortgage broker is required to disclose their fee in writing before you sign the mortgage commitment. This is not optional. It is a regulatory requirement under the Mortgage Brokerages, Lenders and Administrators Act, 2006.
At Private Mortgages Canada, we disclose our broker fee at the outset of every conversation. There are no surprises at the closing table.
Legal Fees: $1,500 to $3,000
Every private mortgage transaction requires a real estate lawyer to review and register the mortgage on title. Legal fees for a standard private mortgage in Ontario typically range from $1,500 to $3,000, depending on the complexity of the deal, the property type, and the number of properties involved.
This cost covers:
- Title search and review
- Mortgage document preparation and registration
- Compliance review
- Disbursement of funds
In most cases, the borrower pays the legal fees for both their own lawyer and the lender's lawyer. Some lenders allow a single lawyer to act for both parties on straightforward transactions, which can reduce costs. Clarify this arrangement before you commit.
Appraisal Fees: $300 to $500+
A professional property appraisal is required on virtually every private mortgage deal. The lender needs an independent assessment of the property's current market value to determine the loan-to-value ratio.
Standard residential appraisal fees in Ontario range from $300 to $500 for a single-family home or condominium. More complex properties — multi-unit buildings, construction projects, or rural properties — may require appraisals in the $500 to $1,500 range.
The appraisal fee is typically paid upfront by the borrower, regardless of whether the mortgage is approved. This is one of the first out-of-pocket costs in the process.
Title Insurance: $250 to $500
Title insurance protects the lender against defects in the property's title — undisclosed liens, encroachments, survey discrepancies, or fraud. Most private lenders require title insurance as a condition of funding.
Premiums typically range from $250 to $500, depending on the property value and the insurer. This is a one-time cost, paid at closing.
Discharge and Renewal Fees
When your private mortgage term ends, you will encounter one of two costs:
- Discharge fee: If you pay off the mortgage in full (through sale or refinance), the lender charges a discharge fee to remove the mortgage from title. This typically ranges from $200 to $500.
- Renewal fee: If you need to extend the term, the lender may charge a renewal fee, often 0.5% to 1% of the outstanding balance, plus legal fees for the renewal documentation.
Renewal fees can be significant. On a $500,000 balance, a 1% renewal fee adds $5,000 to your total cost. This is one of many reasons why a clear exit strategy matters: every renewal compounds the total cost of the private mortgage.
Other Potential Costs
Depending on the deal, you may also encounter:
- Environmental assessment fees (commercial or industrial properties)
- Survey costs ($500 to $2,000 if no recent survey is available)
- Insurance premium adjustments (lenders may require additional coverage)
- Administration fees (some lenders charge ongoing monthly administration fees of $50 to $200)
How Much Does a $500,000 Private Mortgage Actually Cost Over 12 Months?
The numbers below show the total cost of capital for a $500,000 private mortgage at three different rate tiers over a 12-month term. All scenarios assume a 2% lender fee, a 1% broker fee, and standard closing costs for an Ontario residential property.
| Cost Component | 8% Rate Tier | 10% Rate Tier | 12% Rate Tier |
|---|---|---|---|
| Interest (12 months) | $40,000 | $50,000 | $60,000 |
| Lender fee (2%) | $10,000 | $10,000 | $10,000 |
| Broker fee (1%) | $5,000 | $5,000 | $5,000 |
| Legal fees | $2,500 | $2,500 | $2,500 |
| Appraisal fee | $400 | $400 | $400 |
| Title insurance | $350 | $350 | $350 |
| Discharge fee | $300 | $300 | $300 |
| Total Cost (12 months) | $58,550 | $68,550 | $78,550 |
| Effective APR | ~13.7% | ~15.7% | ~17.7% |
The gap between the advertised rate and the effective APR is stark. A mortgage advertised at 8% actually costs the equivalent of approximately 13.7% when all fees are included. At a 10% advertised rate, the true cost climbs to roughly 15.7%.
This is why APR is the number that matters. Use our APR calculator to model your specific scenario, or request a personalised cost breakdown from our team.
A note on shorter terms: If the same $500,000 mortgage at 10% is structured as a 6-month term instead of 12 months, the interest drops to $25,000 but the fees remain the same. The total cost becomes $43,550, and the effective APR climbs to approximately 19.7%. Shorter terms amplify the impact of upfront fees on your true cost of borrowing.
Why Does APR Matter More Than the Advertised Rate?
Annual percentage rate (APR) is the single most useful number for comparing private mortgage offers. It takes the advertised interest rate and adds all mandatory fees, then expresses the total cost as a single annualised percentage.
Without APR, comparing two mortgage offers is misleading. Consider this example:
| Lender A | Lender B | |
|---|---|---|
| Advertised rate | 9% | 11% |
| Lender fee | 3% | 1% |
| Broker fee | 2% | 1% |
| Total fees on $500K | $25,000 | $10,000 |
| 12-month interest | $45,000 | $55,000 |
| Total cost | $70,000 + closing costs | $65,000 + closing costs |
| Effective APR | ~17% | ~15% |
Lender A advertises a lower rate. Lender B charges less overall. Without an APR comparison, the borrower choosing based on rate alone would pay $5,000 more.
This is not hypothetical. Based on our experience across 6,500+ deals on the Streetwise platform, the most common mistake borrowers make is comparing advertised rates without accounting for fee structures. The rate is only one variable. The total cost of capital is what determines whether the private mortgage makes strategic sense for your situation.
PMC's APR calculator lets you input every fee component and see your true cost in seconds. We encourage every borrower to use it, regardless of which lender they ultimately choose.
What Should a Legitimate Private Mortgage Broker Disclose?
The Financial Services Regulatory Authority of Ontario (FSRA) sets clear disclosure requirements for mortgage brokerages operating in Ontario. Under the Mortgage Brokerages, Lenders and Administrators Act, 2006, your broker must provide you with specific written disclosures before you enter into a mortgage commitment.
Here is what FSRA requires — and what you should demand from any private mortgage broker:
01. Total cost of borrowing. The broker must disclose the total dollar amount you will pay over the term, including interest and all fees. Not an estimate. A specific number.
02. Broker fee disclosure. Your broker's compensation must be disclosed in writing. You have a right to know exactly how much your broker earns from placing your mortgage.
03. Lender fee disclosure. All fees charged by the lender — commitment fees, origination fees, administration fees, renewal fees, discharge fees — must be outlined before you sign.
04. Material risks. For private mortgages, the broker must disclose material risks, including the cost of renewal if you cannot exit at term end, the possibility of power of sale if payments are missed, and the risks associated with interest-only payment structures.
05. Suitability assessment. FSRA's 2025-26 Supervision Plan explicitly prioritises private mortgage brokering, with an emphasis on suitability assessments and documented exit strategies. A responsible broker should evaluate whether the private mortgage is the right fit for your situation — and decline the deal if it is not.
At Private Mortgages Canada, these disclosures are not a compliance exercise. They are the foundation of how we operate. Every deal includes full written disclosure of all costs, a documented exit strategy, and a suitability assessment that evaluates whether the private mortgage genuinely serves the borrower's financial outcome.
What Are the Red Flags in Private Mortgage Fee Structures?
Not every private mortgage broker or lender operates with the same standards. In an industry that has historically lacked transparency, certain fee practices should raise immediate concern.
Fees charged before a written commitment
If any lender or broker asks you to pay fees — beyond the appraisal cost — before issuing a formal, written commitment letter, proceed with extreme caution. Upfront fees with no commitment in return are one of the most common complaints in private lending.
Verbal-only fee agreements
Every fee must be in writing. If a broker or lender discusses fees verbally but resists putting them in a written commitment letter, that is a significant red flag. FSRA requires written disclosure. There is no exception.
Undisclosed fees that appear at closing
If fees appear on your closing statement that were not in your commitment letter, do not sign until they are explained and justified. Surprises at the closing table are a sign that the full cost was not disclosed upfront.
"No fee" claims
Private lending has costs. A lender claiming to charge "no fees" is either absorbing fees into a higher interest rate (which obscures your true APR) or not being transparent about how they are compensated. Always ask: "If there are no fees, how is the lender compensated?"
No discussion of exit strategy
A broker who structures a private mortgage without discussing how you will exit it is not acting in your best interest. FSRA explicitly expects brokers to document exit strategies for private mortgage placements. If the conversation focuses exclusively on getting in and never addresses getting out, that is a concern.
Pressure to sign quickly without review
A legitimate private mortgage closing takes time for legal review, appraisal, and proper documentation. If you are being pressured to sign documents without adequate time for independent legal advice, slow down. Urgency created by the lender or broker — as opposed to urgency driven by your own timeline — is a warning sign.
How Does Private Mortgage Cost Compare to the Cost of Inaction?
Understanding the total cost of a private mortgage is essential. But cost is only meaningful in context.
For a real estate investor in the GTA whose deal collapses because bank financing took 60 days instead of 14, the cost of inaction is the deal itself — potentially tens of thousands of dollars in lost equity.
For a business owner in Ottawa whose commercial property sits unleveraged because banks will not recognise their true cash flow, the cost is the capital that remains locked in the property instead of being deployed into business growth.
For a homeowner in Hamilton facing a power of sale with 35 days to act, the cost of inaction is a forced sale below market value — often 10-20% below what the property would fetch on the open market.
In each of these scenarios, the $58,000 to $78,000 total cost of a $500,000 private mortgage over 12 months is not a standalone number. It is weighed against the alternative: what happens if you do not act.
This is why the exit strategy matters as much as the cost. A private mortgage that costs $68,000 over 12 months but preserves $150,000 in equity, completes a construction project worth $200,000 in added value, or saves a property from power of sale proceedings is not an expense. It is a strategic tool deployed with a plan and a timeline.
PMC does not frame private mortgage costs as "reasonable" or "affordable." They are a premium. The question is whether that premium is justified by the outcome — and whether there is a clear, documented plan to transition to more conventional financing once the immediate need is resolved.
For a deeper comparison of private lending versus bank and B-lender options, read our guide on private mortgage vs bank vs B-lender financing.
What Is the Total Cost of a Private Mortgage on a Bridge Loan?
Bridge loans are one of the most common private mortgage structures in Ontario, typically lasting 3 to 6 months. The shorter term changes the cost calculation significantly.
Here is a realistic example of a $500,000 bridge loan at 10% for 6 months:
| Cost Component | Amount |
|---|---|
| Interest (6 months) | $25,000 |
| Lender fee (2%) | $10,000 |
| Broker fee (1%) | $5,000 |
| Legal fees | $2,500 |
| Appraisal fee | $400 |
| Title insurance | $350 |
| Discharge fee | $300 |
| Total Cost | $43,550 |
For a bridge loan that enables you to close on a new property purchase, prevent the collapse of a real estate transaction, or buy time to arrange conventional financing, $43,550 may be a sound investment. For a bridge loan with no clear exit, it is the beginning of a compounding cost cycle.
Use the bridge loan calculator to model the total cost of your specific scenario.
How Can You Reduce the Total Cost of a Private Mortgage?
While private mortgage costs are higher than conventional financing, several strategies can reduce your total cost of capital:
01. Negotiate the lender fee. Lender fees are not fixed. An experienced mortgage broker negotiates on your behalf. The difference between a 2% and a 3% lender fee on a $500,000 mortgage is $5,000.
02. Prepare a strong exit strategy. Borrowers with documented, viable exit plans present lower risk. Lower risk can translate to lower rates and fees. At PMC, exit strategy viability directly influences the terms we can negotiate with private capital sources.
03. Maximise your equity position. A lower LTV ratio means less risk for the lender and better terms for you. If you have the flexibility to bring additional equity to the deal, the rate and fee savings can be meaningful.
04. Shorten the term if your exit is clear. If you can confidently exit in 6 months instead of 12, you save 6 months of interest. On a $500,000 mortgage at 10%, that is $25,000 in savings.
05. Compare total cost, not rates. Use APR as your comparison metric. A lender offering 9% with a 3% fee may cost more than a lender offering 11% with a 1% fee. The APR calculator shows you the true number.
06. Work with an FSRA-licensed brokerage. A licensed brokerage is bound by regulatory disclosure requirements, which protects you from undisclosed fees and ensures professional accountability.
Frequently Asked Questions About Private Mortgage Costs in Ontario
How much does a private mortgage cost in Ontario?
The total cost of a private mortgage in Ontario depends on the interest rate, lender fees, broker fees, legal fees, and other closing costs. For a typical $500,000 private mortgage at 10% interest over 12 months, borrowers should expect a total cost of approximately $65,000 to $75,000, which translates to an effective APR of roughly 15-16%. The specific cost depends on your LTV ratio, property type, exit strategy, and the lender's fee structure.
What is the difference between the interest rate and APR on a private mortgage?
The interest rate is the annual cost of borrowing expressed as a percentage of the loan balance. APR (annual percentage rate) includes the interest rate plus all mandatory fees — lender fees, broker fees, and other costs — expressed as a single annualised percentage. APR gives you the true cost of borrowing and is the most reliable way to compare offers from different lenders.
What fees do private mortgage lenders charge in Ontario?
Private mortgage lenders in Ontario typically charge an upfront lender fee (1-3% of the loan amount), plus interest (7-14% annually). Borrowers also pay broker fees (1-2%), legal fees ($1,500-$3,000), appraisal fees ($300-$500), title insurance ($250-$500), and discharge fees ($200-$500). All fees must be disclosed in writing under FSRA regulations.
Are private mortgage broker fees negotiable?
Broker fees are typically set based on the complexity of the deal, the loan amount, and the work required to source and structure the financing. While there is some flexibility, borrowers should be cautious of brokers who waive their fee entirely — the compensation may be embedded in a higher lender fee or interest rate, obscuring the true cost. Transparency about broker compensation is a regulatory requirement in Ontario.
What does FSRA require private mortgage brokers to disclose?
Under the Mortgage Brokerages, Lenders and Administrators Act, 2006, FSRA requires brokers to disclose the total cost of borrowing, all broker and lender fees, material risks of the mortgage, and the terms and conditions of the commitment. FSRA's 2025-26 Supervision Plan also emphasises documented exit strategies and suitability assessments for private mortgage placements.
How do I calculate the true cost of a private mortgage?
Add together all costs over the term: interest payments, lender fees, broker fees, legal fees, appraisal, title insurance, and discharge or renewal fees. Then compare this total to the loan amount to determine your effective APR. PMC provides a free APR calculator that automates this calculation for any private mortgage scenario.
Why are private mortgage rates higher than bank rates?
Private mortgage rates are higher because private capital carries more risk and serves borrowers whose situations fall outside conventional lending parameters. The premium reflects the speed of funding (days versus months), the flexibility to evaluate complex situations holistically, and the use of private investor capital rather than depositor funds. The cost is a premium for access and speed, not a penalty.
What happens if I cannot exit my private mortgage at the end of the term?
If you cannot refinance or repay the mortgage at term end, you will likely need to renew with the private lender. Renewal typically involves a renewal fee (0.5-1% of the balance) plus continued interest and potentially adjusted terms. This is why exit strategy planning is critical: every renewal adds to your total cost of capital and delays your transition to more cost-effective conventional financing.
Is the lender fee deducted from the mortgage advance?
In most cases, yes. The lender fee is deducted from the gross mortgage amount at funding. On a $500,000 mortgage with a 2% lender fee, you receive $490,000 in net proceeds. The broker fee may also be deducted at source or billed separately. Clarify the net advance amount before you sign.
How does Private Mortgages Canada handle cost transparency?
At PMC, every deal includes a full written disclosure of all costs before the borrower signs a commitment letter. We provide the total cost of borrowing, the effective APR, and a detailed breakdown of every fee component. We also include a documented exit strategy that maps the borrower's path to conventional financing. Our APR calculator is available to every borrower and prospect to model their costs independently. We believe borrowers deserve to see the complete picture — and that transparency builds the trust that transactional lending cannot.
Get Your Personalised Cost Breakdown
The numbers in this guide are ranges. Your actual cost depends on your property, your equity position, your exit strategy, and the capital source that best fits your situation.
Private Mortgages Canada provides every prospective borrower with a detailed, written cost breakdown before any commitment. No verbal estimates. No surprises at closing. Every fee, every cost, every dollar — disclosed upfront.
Start with the numbers. Use the APR calculator to model your total cost of capital for any private mortgage scenario.
Then talk to a strategist. Contact the PMC team at 1-800-208-6255 or through our Deal Snapshot form to request a personalised cost breakdown for your specific situation. We will walk you through every cost component, structure a deal that makes strategic sense, and build an exit plan so the private mortgage serves its purpose: a bridge to your next financial milestone, not a permanent cost.
We have structured over 6,500 deals and deployed more than $2 billion in capital across the Streetwise platform over the past 20 years. We have seen every fee structure, every cost scenario, and every exit timeline. That experience is behind every conversation we have — and every cost we disclose.
The story behind the numbers matters. So does the full cost of the story.
