The useful question is whether you can manage the mortgage today and repay or replace it when the term ends.
What a private mortgage can involve
A private mortgage may come from an individual, a private company or a mortgage investment corporation. The terms can differ substantially. Ontario regulator FSRA describes these mortgages as generally temporary financing and warns that higher fees, short terms and interest-only payments may apply. FSRA private mortgage guide.
Start with the proposed agreement rather than assumptions about the lender category. Write down what problem the mortgage solves, how long you need it and the amount you must actually receive at closing.
Equity does not answer every question
FSRA notes that private lenders often place greater weight on property value. That does not establish a universal “no income needed” rule or make the payments affordable. FSRA guidance on private lending.
Separate two questions: what security the lender is willing to accept, and how you will meet the payment and repayment obligations. Ask what financial information this lender needs. Never enter invented income simply to make a calculator result look acceptable.
Calculate the money you will receive
Consider a hypothetical $100,000 new advance. If $60,000 clears existing borrowing and $5,000 covers the quoted fees and closing costs, only $35,000 remains for your planned use. The mortgage amount and the money available to spend are different figures.
List every deduction once. Ask whether interest is paid monthly, withheld from the advance or added to the debt. If money is being reserved for payments, show that reserve separately; do not also count it as available cash.
Test the balance at the end
For an interest-only arrangement, paying the agreed interest does not reduce the principal. Confirm the expected payout at maturity, including any unpaid interest and charges. FSRA explains interest-only structures.
Use a simple worksheet with three dates: closing, midway through the term and maturity. At each date, record the expected balance, available savings and next action. This makes it easier to notice a gap while there is still time to respond.
Write an exit plan with evidence
In its Ontario supervision guidance, FSRA says an exit plan must be realistic. If selling is the plan, relying on speculative price growth is not a sound substitute for sufficient equity today to cover repayment and costs. FSRA exit-strategy guidance.
For a planned refinance, identify the documents or financial changes needed and who will review progress. For a sale, test a lower sale price and a later completion date. These are planning exercises, not predictions.
Questions to settle before accepting
Ask for a written explanation of the full amount due if you repay early, the amount due at maturity, and what happens if your exit is delayed. Identify which fees are estimates and which are fixed. Have your lawyer explain any term you cannot describe back in your own words.
Compare at least one alternative plan, such as a smaller advance or postponing the expense. Use the calculator to organise cash flow, then confirm the contract-specific figures with the professionals handling the transaction.
Put the figures into a scenario
Use the appropriate assumptions, compare the results and save a summary for your file.
Open the Residential Calculator →Sources and review
References checked September 22, 2026. Examples are illustrative; confirm the lender, insurer and program requirements for your situation.