Private Mortgage Interest Rates in Canada: What to Expect in 2025
Why Private Mortgage Rates Matter More Than Ever
In the current lending climate, more Canadians are turning to private mortgage lenders for fast, flexible, and accessible financing. Whether it’s due to strict bank requirements, unpredictable income, or credit challenges, private mortgages offer solutions—but they come at a higher cost, especially in terms of interest.
So what should you expect from private mortgage interest rates in Canada in 2025 and 2026?
This guide offers a deep dive into:
- Why private lender rates vary widely
- The major factors that influence your final interest rate
- Trends from 2024 and current expectations for 2025 and 2026
- Tips to secure the best rate possible from private lenders
What Are Private Mortgage Interest Rates?
Private mortgage interest rates are what borrowers pay to lenders who are not federally regulated banks or credit unions. These include:
- Individuals
- Private lending corporations
- Mortgage Investment Corporations (MICs)
- Syndicated lenders
Private lenders assume higher risk—especially when lending to people with poor credit or irregular income—so their rates are often much higher than those from traditional banks, sometimes double or triple.
Why Private Mortgage Rates Vary
Unlike banks that base their mortgage rates on the Bank of Canada (BoC) overnight rate and offer government-insured lending products, private lenders determine rates based on risk, liquidity, and borrower profile.
6 Key Variables That Affect Private Mortgage Rates:
| Factor | Influence on Rate |
| Loan-to-Value (LTV) | Higher LTV = Higher rate (more risk) |
| Credit Score | Lower credit = Higher rate |
| Location & Property Type | Urban = Lower risk = Better rate |
| Borrower Income Stability | Proves repayment ability |
| Loan Term Length | Shorter term = Lower rate (in some cases) |
| Exit Strategy | Clear repayment/refinance plan = Better deal |
📌 Remember: A private mortgage is about lending against the property, not lending based on your personal financial reputation.
Current Private Mortgage Rate Ranges (2024 Recap)
By the end of 2024, private mortgage interest rates in Canada hovered between:
- 8% to 14% for most residential borrowers
- 10% to 16%+ for commercial or rural properties
- 12% to 18% for emergency or high-risk situations
This was due to:
- Elevated Bank of Canada policy rates
- High inflation-adjusted risk premiums
- Tightening federal guidelines for traditional lenders
- Surge in alternative lending demand
2025 Outlook: What to Expect from Private Lenders
In 2025, industry experts expect stabilization, not dramatic rate drops. Even if the Bank of Canada begins easing interest rates, private lenders may continue pricing cautiously due to ongoing economic uncertainty.
🔮 Forecasted Rate Ranges in 2025
| Borrower Profile | Expected Rate Range (2025) |
| Low-risk (LTV < 65%, urban) | 8.5% – 9.5% |
| Mid-risk (fair credit, stable income) | 9.5% – 11.5% |
| High-risk (low credit, high LTV, self-employed) | 11.5% – 14% |
| Emergency or short-term funding | 13% – 17%+ |
Key Drivers:
- Gradual BoC rate cuts may ease pressure, but spreads will remain high
- Lenders will maintain cautious pricing until inflation is consistently below 3%
- Regulatory uncertainty surrounding non-bank lenders will lead to margin protection
2026 Outlook: Will Private Rates Come Down?
Looking ahead to 2026, there’s cautious optimism that private mortgage interest rates in Canada could begin to decline, assuming a few conditions are met:
📉 Conditions That Could Lower Rates:
- Bank of Canada policy rate drops below 4%
- Inflation remains under 2.5%
- Stabilization of housing prices in major markets
- Increase in investor liquidity in the MIC space
🔮 Forecasted Rate Ranges in 2026 (Optimistic Scenario)
| Borrower Profile | Estimated Rate Range (2026) |
| Low-risk | 7.5% – 9% |
| Mid-risk | 8.5% – 10.5% |
| High-risk | 10% – 13% |
| Emergency bridge loans | 12% – 16% |
⚠️ Even with economic improvement, private lender rates will likely remain higher than traditional rates—especially for borrowers with credit or income concerns.
How to Get the Best Private Mortgage Rate in 2025 and Beyond
Even in a high-rate environment, you can lower your rate by reducing risk and working strategically:
✅ 1. Improve Your Loan-to-Value (LTV) Ratio
- Aim to borrow less than 70% of your home’s appraised value
- This may qualify you for tiered rate discounts
✅ 2. Choose a Short-Term, Interest-Only Option
- This can lower your monthly payments and help you bridge to bank refinancing
✅ 3. Build a Clear Exit Plan
- Show how you’ll refinance or repay the loan at maturity (e.g., selling the property, expected bank loan)
✅ 4. Use a Licensed Private Mortgage Broker
- They can connect you with lenders offering better rates and fewer fees
- They also know which MICs offer rate specials for specific property types or borrowers
✅ 5. Be Transparent and Organized
- Gather your documents in advance (ID, property tax bill, appraisal, proof of income)
- Honesty about your credit and finances builds lender trust
Comparing Private vs. Traditional Mortgage Rates
| Category | Private Lender (2025) | Bank Mortgage (2025) |
| Interest Rate | 8% – 14% | 5% – 6.5% |
| Term Length | 6–24 months | 1–5 years |
| Credit Score Requirements | Flexible | Strict (680+) |
| Speed of Approval | 2–5 days | 2–4 weeks |
| Best For | Fast, flexible financing | Low-cost, long-term solutions |
Private mortgages are not meant to replace bank loans permanently—they’re short-term solutions. Most borrowers plan to refinance with a traditional lender once they’ve repaired credit or stabilized their income.
The Real Cost: What Else to Consider Beyond the Rate
When calculating your true borrowing cost, consider the following:
Common Additional Charges:
- Lender/broker fees (1–4% of the loan amount)
- Appraisal fees
- Legal fees for mortgage registration
- Renewal or discharge fees
- Penalty fees for missed payments or early repayment
Your Total Cost of Borrowing (TCB) can vary significantly—even if interest rates appear similar across lenders.
Conclusion: Plan Smart for Private Mortgage Interest Rates in Canada
Private mortgages in Canada offer essential financial relief and access—especially when banks say no. But borrowers must plan for the higher cost of interest, fees, and short terms.
In Summary:
- Expect rates between 8% and 14% in 2025, depending on your profile and risk.
- 2026 may bring gradual rate relief, but rates will remain higher than banks.
- Use a broker, keep your LTV low, and present a solid repayment strategy.
- Always compare total costs, not just the advertised rate.
✅ Need Help Securing the Best Private Mortgage Rate?
Whether you’re facing a time-sensitive closing, have been turned down by a bank, or want to leverage your home equity fast…
👉 Connect with Equity Mainly Matters
Get expert guidance, access to Ontario’s top private lenders, and competitive rates tailored to your needs.