What Do Private Mortgage Fees Actually Cost in Canada?
A private mortgage in Canada costs more than just the interest rate. On a typical $150,000 private second mortgage, you are looking at a lender fee of 1% to 5%, a mortgage broker fee of 1% to 6%, legal fees for both sides totalling $2,000 to $4,000, and an appraisal around $500 to $900. After everything comes off, you would net roughly $138,000. All fees come off your proceeds at closing. You should not pay anything significant before that day.
When the bank says no, a private mortgage moves fast and asks fewer questions. That is exactly why people use them. But the cost structure is different from anything you have dealt with before.
This is the full breakdown. Every fee, what it covers, who gets it, and what lands in your account when it is all done.
The Primary Cost: Your Interest Rate
Private mortgage rates in Canada are higher than bank rates. That is not the lender being unfair. It is the math of risk.
Why private lenders charge more
Private lenders are taking on deals the banks will not touch. Banks approve borrowers who fit a very specific box. Documented income, strong credit, standard property. Private lenders take the deals that fall outside that box.
- Maybe your income is hard to prove because you run your own business.
- Maybe your credit took a hit.
- Maybe the property is unusual.
Whatever the reason, the bank passed. A private lender steps in, takes on more risk, and charges accordingly.
What rates look like right now (2026)
- Private first mortgages: 6.99% to 9.99%
- Private second mortgages: 7.99% to 13.99%
Where you land inside those ranges comes down to your loan to value ratio more than anything else. A property in a major city with strong equity sitting below 55% LTV will look very different to a lender than a rural property pushing 75% LTV. Location matters too. GTA core properties attract the most competitive pricing. The further you get from an urban centre the higher the rate tends to go.
Second mortgages sit behind your first mortgage on title. If something goes wrong, the first mortgage lender gets paid before the second. That added risk is why second mortgage rates are higher than first mortgage rates.
Interest only payments and what that means for you
Most private mortgages are set up as interest only. You pay the interest each month and the principal balance stays the same. That keeps your monthly payment manageable while you sort out the bigger picture.
This is not a forever loan. It is a bridge. Six months to two years while you fix whatever got you declined at the bank, then you move to a traditional lender at a better rate. That is the plan most people are working toward, and a good broker helps you build that plan from day one, not as an afterthought.
Closing Costs: Every Fee Broken Down
The fees below are paid at closing. They come off your loan proceeds before the money reaches your account. Your lawyer handles all of this on closing day. You do not write separate cheques for each one.
The one exception is the appraisal, which is usually paid before closing. More on that below.
The Lender Fee
Range: 1% to 5% of the loan amount
This goes to the private lender for funding your mortgage. It covers their admin, their review of your file and property, and part of their return on the deal.
On a $150,000 mortgage at 2% that is $3,000 off the top.
The lender fee and the interest rate together make up what the lender earns on the deal. A lender at 8% interest and 1% fee is a different deal than one at 10% interest and 5% fee. Always look at both numbers together, not just the rate on its own.
The Mortgage Broker Fee
Range: 1% to 6% of the loan amount
With a regular bank mortgage, the bank pays the broker. You see nothing on your statement. With a private mortgage, the complexity is higher, and the fee comes from the borrower instead.
That fee covers a lot of work that happens before you ever see a commitment letter. Your broker reviews your equity position, finds the right private lender from a network of dozens or hundreds, negotiates your rate and terms, packages your application, and manages everything through to closing.
Mortgage broker charges vary based on the size of the loan, the complexity of the deal, and how quickly it needs to close. A straightforward second mortgage in Toronto is a different conversation than a time-sensitive deal on an unusual property outside the city.
In Ontario, FSRA regulations put a cap on the combined total a lender and broker can charge. Your broker is required by law to give you full written disclosure of their fee before you commit to anything. If that is not happening, walk away.
Legal Fees
Budget: $2,000 to $4,000 total
- This is the part that catches most people off guard.
- In a standard bank mortgage, you pay your own lawyer.
In a private mortgage, you pay both your lawyer and the lender's lawyer. That is the standard across the industry in Canada.
Your lawyer registers the mortgage on title and handles the funds. The lender's lawyer protects their client's side of the transaction. Both are doing real work and both bill for it.
Budget $1,000 to $2,000 per side for a typical private second mortgage. More complex situations involving title issues or power of sale can push that higher.
The Appraisal
Cost: $500 to $900, usually paid before closing
Private lending is equity based. The lender's decision rests entirely on what your property is actually worth today. Not what you think it is worth. Not what an online estimate says. They need a report from a licensed appraiser who physically visits the property.
This is almost always the one fee paid before closing day. The lender needs it before they will issue a formal commitment. If the deal does not close for any reason this fee does not come back to you. That is why it matters to get your file in solid shape before the appraisal is ordered.
A Real Example: What You Actually Walk Away With
Here is how it plays out on a real deal.
You need $150,000 from a private second mortgage. One year term, interest only. The goal is to pay off high interest debt and use the breathing room to get back to qualifying with a traditional lender.
The numbers on closing day
- Loan amount from lender: $150,000
- Lender fee at 2%: $3,000
- Broker fee at 3%: $4,500
- Your legal fees: $1,500
- Lender legal fees: $1,500
- Appraisal paid earlier: $700
- Total fees: $11,200
- Net funds to you: approximately $138,800
- Monthly payment at 10.5% interest only: $1,312.50
If you needed the full $150,000 in hand, the loan would need to be sized at around $165,000 to account for the fees. A good broker figures this out before the commitment letter goes out, not after. That is the conversation that should happen on day one.
What a Clean Private Mortgage Deal Looks Like
The fees on a private mortgage are higher than a bank. That is just true. But they should never be unclear.
A licensed mortgage broker in Ontario has a legal obligation to give you a written Disclosure Statement before you sign anything. It shows your rate, every fee, the total cost of borrowing, and what you will receive at closing.
Nuborrow gives every client the full picture before they commit. Rate, fees, monthly payment, net proceeds, and a plan for where you go from here.
Things that should make you pause
- Large fees asked for before your file has been reviewed by a lender
- Verbal commitments with nothing in writing
- Fees explained only at the very end of the process
- Pressure to move before you have had time to read the documents
- No clear answer on what you will actually net after fees
Frequently asked questions
Mortgage broker fees on private mortgages in Canada typically run 1% to 6% of the loan amount. On a $150,000 mortgage, that is $1,500 to $9,000, paid at closing. The exact number depends on deal size, complexity, and how fast it needs to move.
Yes. On a bank mortgage, the lender pays the broker so you see nothing on your end. On a private mortgage, the broker fee comes from the borrower. It is standard, it is disclosed in writing upfront, and it is regulated in Ontario under FSRA.
As of 2026, private first mortgages are running 6.99% to 9.99%. Private second mortgages are running 7.99% to 13.99%. Your actual rate depends on your equity, your property location, and your specific situation. Strong equity in a major urban centre tends to land on the lower end of those ranges.
It is a one-time charge from the private lender for funding your loan. Usually 1% to 5% of the loan amount. It covers their costs and part of their return on the deal. It comes off your proceeds at closing.
Because in a private mortgage transaction, both sides need legal representation and the borrower covers both. It is standard across Canada. Budget $2,000 to $4,000 total for a typical private second mortgage in 2026.
Depends on what you are comparing it to. If the alternative is staying at 25% interest on a credit card, or losing a property, or missing a time-sensitive opportunity, then the math often makes sense. The fees are real, but so is the cost of doing nothing. The key is going in with a clear plan to get to a better rate within 12 to 24 months.