More Ontarians Expected to Get into Private Mortgages

As spring home buying season begins, FSRA encourages homeowners to take the time to understand what they are getting into

As private mortgages become more prevalent in Ontario, the Financial Services Regulatory Authority of Ontario (FSRA) is strongly encouraging consumers to learn about the differences between a private and traditional mortgage, a knowledge gap that could come with significant costs for borrowers.

A poll commissioned by FSRA in the fall finds a majority of homeowners (54%) believe private mortgage payments go towards both the interest and principal payment, when in reality, many private mortgage payments go towards servicing the interest only.

“FSRA’s polling demonstrates the importance of understanding what you are getting into,” said Huston Loke, FSRA’s Executive Vice-President of Market Conduct. “With rising interest rates, high inflation, and a slowing economy, more consumers are struggling to qualify for a traditional loan. It’s critical that homeowners who enter into private mortgages fully appreciate how their loan works, the pros and cons of the arrangement, and the true cost of a private mortgage.”

The FSRA poll also found that the most popular reasons for using a private lender were more flexible terms (26%), an easier application process (13%), and the belief that it is a better option for those who are self-employed or don’t have a steady income (12%). However, most respondents (66%) are not willing to pay more in lender fees or broker commissions to get a private mortgage. And 80% of respondents believe it is important to have an exit strategy to move from a private mortgage to a traditional mortgage.

“Mortgages from private lenders often come with different terms and conditions than traditional bank mortgages,” said Loke. “Higher lender fees, interest-only conditions and shorter terms are just some of the things you may need to navigate. Private mortgages can be an option for some consumers, such as those who are unable to qualify for a traditional mortgage. But remember, for many people private mortgages should be a short-term stop gap, not a long-term solution.”

FSRA’s statistics from 2021 show that 10.6% of mortgages brokered by licensed mortgage brokers were private (35,568), and FSRA believes this number increased in 2022 and is expected to increase further in 2023 given current market conditions.

The dollar value of private mortgages brokered by licensed mortgage brokers in Ontario increased by 72% from $13 billion in 2019 to $22.4 billion in 2021.

To help further educate consumers about the difference between private and traditional mortgages and the questions to ask a mortgage professional, FSRA is launching a consumer education campaign with the theme, “know what you are getting into”. More information can be found here:

FSRA continues to work on behalf of all stakeholders, including consumers, to ensure financial safety, fairness, and choice for everyone. Learn more at

For media inquiries:

Russ Courtney
Sr. Media Relations and Digital Officer
Financial Services Regulatory Authority
C: 437-225-8551
Email: [email protected]