There's a particular kind of homeowner I meet in Halton Hills more than anywhere else: equity-rich and option-poor. They own a Georgetown or Acton home worth over a million dollars, they've paid down most of the mortgage, and the bank still said no. Income too complicated. Credit too bruised. A CRA balance the branch didn't want to look at.
Private and second mortgages exist for exactly this gap. They're also the corner of the mortgage market with the most aggressive marketing and the least honest pricing talk, so let me give you the version I'd give a friend.
What These Products Actually Are
A second mortgage is a loan registered behind your existing mortgage. Your first mortgage stays exactly as it is, rate and all, and the new lender takes second position on title. A private mortgage describes who's lending: not a bank, but a mortgage investment corporation (MIC) or an individual investor, arranged through a licensed brokerage. Private money can sit in first or second position; around here it's most often a second.
The underwriting logic is flipped from a bank's. A bank lends against your income and treats the house as backup. A private lender lends against the property and treats your income story as context. That's why files the bank declines, self-employed with optimized taxes, consumer proposals, CRA arrears, can still be approved in days.
The Costs, With No Decoration
This is the section most private-lending pages fudge, so here it is plainly. In the current market, second mortgages through private lenders typically price anywhere from the high single digits to the mid-teens, depending on your combined loan-to-value, the property, and the file. On top of the rate there's usually a lender fee of 1% to 3% of the loan, and on private deals a broker fee as well, both disclosed in writing before you sign anything. Terms are short, commonly one year, and payments are often interest-only.
Expensive compared to a bank mortgage? Yes. That's not the right comparison. The right comparison is whatever the money is replacing: 21% credit cards, a CRA collections situation, a collapsing closing, or a forced sale of the house. Against those, a year of private money is often the cheapest option on the table. Against a mild want, it rarely is.
Private money is a bridge, not a home. Priced against a forced sale it's cheap. Priced against patience it's expensive.
How Much You Can Borrow
Most private lenders in this market lend to a combined 75% to 80% of your home's appraised value across all mortgages on title. Halton Hills values make the math work in your favour. On a $1.1 million Georgetown home with $400,000 owing on the first mortgage, 80% combined is $880,000, which leaves up to $480,000 of theoretical room in second position. Most real files borrow a fraction of that, but the headroom is why local approvals come fast.
When It Makes Sense
- Keeping a great first mortgage intact. If you're locked at a 2021 rate and need funds, a second position can beat breaking the first. I've compared the options in detail in how to tap equity without losing your low rate.
- CRA arrears. Banks generally won't refinance until the CRA is paid. Private money pays the CRA, then a bank refinance six to twelve months later takes out the private loan. This is one of the most common rescue patterns I arrange.
- Stopping a power of sale. If you've fallen behind and the enforcement clock is running, an equity-based loan can pay the arrears and stop the process. Time matters enormously here; my behind on payments page covers what to do first.
- Self-employed, almost there. Twelve months into a business that's working, but banks want two years. Private money bridges the gap, then the file graduates.
- Consolidating expensive debt when a full refinance doesn't fit, either because of penalties or qualification.
One more comparison worth making: for smaller unsecured amounts, a personal loan sometimes beats mortgaging your home at all. I've ranked those options in my guide to private lenders and personal loans in Ontario. If you own property with equity, though, secured lending will almost always win on rate.
The Exit Plan Is the Whole Deal
Here's my rule, and I hold to it: I don't arrange a private or second mortgage without a written idea of how you leave it. Twelve to twenty-four months, then a refinance to a B lender or bank once the credit heals, the CRA is cleared, or the income history matures. Without an exit, private money becomes a treadmill of renewal fees, and I've seen files where the fees quietly ate the equity the loan was supposed to protect.
A good mortgage agent earns their fee on these deals twice: once finding the money, and once making sure you're not still in it three years later.
Bank said no, but the equity is there?
Send me the picture: what you own, what you owe, what the money needs to do. I'll tell you within a day whether a private or second mortgage fits, what it honestly costs, and what the exit looks like.
Book a Discovery CallThe Guardrails
Private lending in Ontario is regulated, and the protections matter. As a licensed agent I'm required to document why a private mortgage is suitable for you, not just available to you. All fees get disclosed in writing before commitment. And on private deals, independent legal advice isn't a formality to rush through; it's the moment someone whose only job is protecting you reads the fine print. Take it seriously.
If anyone offers you a private mortgage with vague fees, pressure to sign, or no discussion of how you'll exit, walk away. There's enough legitimate private capital in this market that nobody in Halton Hills needs to take a bad deal. You can see how I work with local files on my Georgetown mortgage page.
Frequently Asked Questions
What do private and second mortgage rates look like in Halton Hills?
Typically from the high single digits to the mid-teens depending on combined loan-to-value, position, the property, and the file, plus a lender fee of roughly 1% to 3% and, on private deals, a broker fee. Every fee is disclosed in writing before you commit. Lower loan-to-value earns better pricing, which is why equity-rich Halton Hills files often price at the better end.
How fast can a private or second mortgage close?
Days, not weeks, when it needs to. Approvals can come in 24 to 48 hours and funding within a week or two, since the lender's main questions are the property's value and the equity position. An appraisal and independent legal advice are usually the pacing items. For power of sale or collapsing-closing situations, speed is the whole point of the product.
Does bad credit stop me from getting a second mortgage?
Rarely. Private lenders lend primarily against the property, so bruised credit, a consumer proposal, or a past bankruptcy usually affect pricing rather than approval. What matters most is the equity, the property's marketability, and a believable exit plan back to mainstream lending.
What are the real risks of a private mortgage?
Two big ones. Cost drift: renewing a short-term loan repeatedly, with fees each time, instead of exiting to cheaper money. And enforcement: the loan is secured by your home, so sustained default has real consequences. Both risks are managed the same way, with an honest budget for the payments and a written exit plan before you sign. Independent legal advice on private deals exists precisely for this.
How much equity do I need to qualify?
Most private lenders cap combined borrowing at 75% to 80% of appraised value across all mortgages on the property. So on a $1 million home you'd generally need your existing mortgage below roughly $750,000 to $800,000 for meaningful second-position room. The appraisal, not the tax assessment, sets the number.