Private Mortgages at Year-End: What Borrowers Should Know

As 2025 comes to a close, more Canadian borrowers are turning to private mortgages to bridge gaps left by traditional lenders. With banks tightening underwriting rules, borrowers facing renewals, refinances, or credit challenges are finding private financing to be a practical — sometimes necessary — solution at year-end.

Here’s what borrowers should know before choosing a private mortgage in late 2025.

1. What Is a Private Mortgage?

A private mortgage is funded by:

• Individual investors

• Mortgage investment corporations (MICs)

• Private lending firms

Rather than banks.

Key differences:

• Asset-based approvals

• Flexible income verification

• Shorter terms (usually 6–36 months)

• Higher interest rates than banks

• Faster approvals

2. Why Private Mortgages Are Popular at Year-End

Several year-end factors increase demand:

• Borrowers facing renewal who can’t qualify with banks

• Self-employed income that doesn’t reflect full earning power

• Credit scores impacted by recent economic strain

• Need for fast closings before December 31

• Equity-rich but income-light homeowners

Private lenders focus more on property value and exit strategy than income ratios.

3. When a Private Mortgage Makes Sense

✔ When You Don’t Qualify With a Bank

Private lenders are more flexible on:

• Credit scores

• Income documentation

• Debt ratios

This is common for:

• Self-employed borrowers

• New business owners

• Recently separated or divorced individuals

✔ To Handle a Renewal or Payout Deadline

If your mortgage matures and you don’t qualify for traditional refinancing, a private mortgage can prevent default or forced sale.

✔ For Short-Term Financing Needs

Private mortgages work best as temporary solutions:

• Bridge financing

• Renovations

• Debt consolidation

• Property sale timing

They are not designed for long-term use.

✔ For Investment or Business Purposes

Investors often use private financing to:

• Acquire or renovate properties

• Stabilize cash flow

• Improve property value before refinancing

4. Typical Private Mortgage Terms in Late 2025

Borrowers can expect:

• Interest rates: 8%–14%+ (risk-based)

• Loan-to-value: up to 75%

• Terms: 6–24 months

• Fees: lender + broker fees (1–4%)

Costs are higher — but flexibility and speed are the trade-offs.

5. Exit Strategy Is Critical

Every private mortgage must have a clear exit plan:

• Refinance with a bank or B-lender

• Sell the property

• Pay down debt to qualify for traditional lending

Without an exit, costs can escalate quickly.

6. Risks Borrowers Must Understand

Before proceeding, consider:

• Higher interest costs

• Short-term maturity risk

• Renewal uncertainty

• Additional fees

Private mortgages solve problems — but they must be used strategically.

7. How Borrowers Can Reduce Private Mortgage Costs

Smart strategies include:

• Improving credit during the term

• Paying down unsecured debt

• Increasing property value

• Choosing shorter terms

• Working with experienced brokers

Preparation can turn a private mortgage into a stepping stone — not a setback.

8. Year-End Timing Considerations

December brings:

• Faster closings

• Lender urgency

• Holiday-related delays if started too late

Borrowers should initiate applications early in December to ensure funding before year-end.

Final Thoughts

Private mortgages at year-end 2025 can be powerful tools for borrowers who need flexibility, speed, or time to improve their financial position. When used with a clear plan and professional guidance, they provide breathing room and opportunity.

Used incorrectly, they become expensive mistakes.

If you’d like, I can turn this into a RateShop private-lending guide, borrower checklist, or comparison tool.