Private Mortgages in Toronto and Durham, With a Clear Exit Strategy

I'm Theeban Pathmanathan, Mortgage Agent Level 2 with FIN Mortgage – Dominion Lending Centres, and private and alternative lending is one of my specialties. I'll help you decide whether a private mortgage makes sense, and if it does, build your exit strategy before you sign.

Who a private mortgage is for

• Borrowers with bruised credit, a past consumer proposal or collections.
• Self-employed borrowers whose income is hard to document.
• Homeowners facing a deadline: power of sale, property tax arrears or a closing that's about to fall through.
• Buyers who need bridge financing between a purchase and a sale.
• Investors buying properties that don't fit standard lending rules.
• Homeowners with a lot of equity but limited provable income.

If you can qualify with a bank or an alternative lender, that is almost always cheaper. Part of my job is to check those options first.

How private mortgages work

Private lenders, which may be individuals or mortgage investment corporations (MICs), focus mainly on the equity in your property and the strength of your plan, rather than strict income and credit rules. That flexibility comes at a cost.

What to expect

• Short terms, commonly 6 to 24 months
• Higher interest rates than bank or B-lender mortgages
• Often interest-only payments
• Lender and broker fees, which are disclosed to you in writing before you commit
• Lower loan-to-value limits: the lender wants a meaningful equity cushion
• First or second position: a private mortgage can replace your first mortgage or sit behind it as a second mortgage

Private lenders aren't bound by the federal stress test or OSFI's B-20 guideline, which is why they can approve files that banks can't. In Ontario, mortgage brokering, including private mortgages, is regulated by FSRA, and you'll receive disclosure documents explaining the costs and risks.

What private lenders look at

Beyond your equity, lenders weigh the property's location, condition and how easily it could be sold; whether the monthly payments are realistic for you; and the story: what happened, why you need the funds and what has changed. A clear, honest explanation helps, and I package your file so these points are clear from the start, which tends to mean better terms and fewer delays.

Your exit strategy

This is the most important part. Before we place a private mortgage, we agree on how you'll get out of it. Common exit strategies include:

• Refinancing to a B or A lender once your credit, income or tax situation improves (see refinancing back to a traditional lender)
• Selling the property on your timeline instead of under pressure
• Completing a sale that covers a bridge loan
• Receiving expected funds, such as a business payment or an estate settlement

I'll check in through your term so we're ready to move when the time comes.

Documents you'll need

• Photo ID
• Current mortgage statement(s), property tax bill and home insurance details
• An appraisal (I'll help arrange it)
• An explanation of your situation and your exit plan
• Any available income documents (fewer are needed than with a bank, but they still help)
• Details of any debts or arrears to be paid off
• For purchases: the Agreement of Purchase and Sale

The process with Theeban

1. Free, confidential consultation. No judgment. We talk about what happened and where you want to be.
2. Check every option first. If an A or B lender can help, that's usually cheaper, and I'll tell you. Self-employed? Stated income mortgages may cost less than private lending.
3. Build the exit strategy and size the loan to fit it.
4. Shop private lenders for the best balance of rate, fees and terms.
5. Full disclosure. You review all costs in writing before you commit.
6. Close and follow up, working toward your exit from day one.

Common private mortgage scenarios

• Power of sale or arrears: stopping the clock while you refinance or sell properly.
• Paying off CRA debt so you can qualify with a regular lender later.
• Bridge financing when your new home closes before your current one sells.
• Consolidating high-interest debt when credit issues rule out a bank.
• A purchase that falls through with a bank late in the process.
• Renovating a property to improve value before refinancing.

A local Toronto and Durham angle

Toronto and Durham homeowners often have substantial equity, even when their credit or income tells a different story. That equity is what makes private lending possible. Whether your property is in Scarborough, Markham, Pickering, Ajax, Whitby or Oshawa, I work with private lenders who are comfortable lending in the GTA and Durham, and I can meet at my Toronto or Pickering office, including evenings and weekends.

Questions to ask before you sign

A private mortgage used well can protect your home, your credit and your options. Used without a plan, it gets expensive fast. Before you accept any offer, make sure you can answer these:

• What's the total cost, including all lender and broker fees, legal fees and the appraisal?
• Is the mortgage open, closed or partly open, and what does it cost to pay it off early?
• What happens if I need more time at the end of the term, and what would renewal fees be?
• Are payments interest-only, and can I afford them comfortably?
• What's my realistic exit strategy, and what has to happen for it to work?

I walk through every one of these with you, in plain English, before you commit. You should also get independent legal advice. The payment calculator can help you compare a short-term mortgage with the payments you're making now.

Frequently asked questions

This page is general information only and is not financial, legal or tax advice. All mortgages are subject to lender approval and qualification (O.A.C.). Rates, terms, programs and government rules change from time to time, so please speak with me about your own situation. Calculator results are estimates only and do not constitute a mortgage approval or offer. Theeban Pathmanathan, Mortgage Agent Level 2 (licence M14000189), FIN Mortgage – Dominion Lending Centres, brokerage licence #12825, independently owned and operated. Licensed by the Financial Services Regulatory Authority of Ontario (FSRA).