What is a private purchase mortgage?
A private purchase mortgage is a first mortgage from a private lender used to buy a property, approved primarily on the down payment, the property's value and the borrower's exit plan rather than bank debt-service ratios. In Ontario it is usually a 6–24 month, often interest-only loan, designed to be refinanced to a bank or B lender later.
Who uses a private mortgage to buy
- Self-employed buyers with strong business cash flow but low declared income.
- Newcomers and returning Canadians without enough Canadian credit history yet.
- Buyers recovering from credit events — past collections, consumer proposals or discharged bankruptcy.
- Purchasers with a fast or firm closing after a bank decline, appraisal shortfall or condition deadline.
- Investors and non-standard properties — multiplexes, properties needing renovation, rural or mixed-use.
- Move-up buyers needing bridge financing before their current home sells.
How Meshesha structures a purchase file
- Confirm the numbers: purchase price, deposit paid, remaining down payment, closing costs and land transfer tax.
- Assess the property: type, location and condition — these set the loan-to-value private lenders will accept.
- Write the exit first: which lender you're aiming for next, what has to change (credit, income documents, time) and when.
- Match to two or three suitable lenders and compare rate, fees, prepayment terms and renewal practice.
- Coordinate appraisal and lawyers against the closing date, with written cost disclosure before you sign.
| Factor | Common range | What moves it |
|---|---|---|
| Down payment | ~20–35% | Property type, location, credit story |
| Rate (first mortgage) | ~7–12% / yr | LTV, market rates, property |
| Lender fee | ~1–3% | Loan size, complexity, urgency |
| Term | 6–24 months | Exit timeline |
| Payments | Usually interest-only | Lender preference |
Ranges are illustrative and not a commitment or quote; individual results vary.
The real cost of a private purchase — calculated
Use the calculator below with your own numbers. For a purchase, enter zero existing mortgages and the private loan amount you need.