First Mortgage in Ottawa: Private First Mortgages Explained
In Ottawa, a private first mortgage usually solves a timing problem: a renewal your bank declined, a purchase that has to close before your income can be documented, or arrears that need to be cleared before a power of sale. It's the senior loan on your home, priced below any other private option, but still well above a bank. Here's how it works in Ottawa.
Key takeaways
- A private first mortgage is the main loan on your property, registered in first position.
- Typical 2026 pricing: about 7% to 11% interest-only, with a 1% to 3% lender fee.
- Lenders commonly lend to about 75% to 80% of value on Ottawa houses; less on condos and rural property.
- Ottawa has no municipal land transfer tax — on a purchase, only Ontario's applies.
What is a private mortgage?
A private mortgage is a loan on your home from a non-bank lender — a mortgage investment corporation, a private lending company or an individual investor — approved on equity and the property rather than bank ratios and the stress test. In Ontario these loans are arranged through FSRA-licensed brokerages that must disclose the full cost before you commit.
What is a second mortgage — and how is a first different?
A second mortgage is added behind your existing first. A private first replaces your existing lender, or funds a purchase, and becomes the senior charge. It costs less per dollar than a second, but applies to your whole balance. If your current first mortgage has a low rate and a big penalty to break, compare a second mortgage before switching everything.
Why are private mortgage positions important?
The first mortgage is repaid first if the home is sold under power of sale, after costs and property tax arrears. That's why first-position private lenders accept higher loan-to-value and lower rates. As the first lender, it also decides whether a second can be registered behind it later.
Who lends private first mortgages in Ottawa?
- Mortgage investment corporations lending across Ontario.
- Private lending companies active in Eastern Ontario.
- Individual investors, through a licensed brokerage.
How does the payment work on an Ottawa private first mortgage?
Interest-only, monthly. Example: a $690,000 Ottawa home with a $483,000 private first mortgage (70% loan-to-value) at 9.49%, compounded semi-annually:
| Item | Amount |
|---|---|
| Monthly interest-only payment | $3,746.32 |
| Interest over 12 months | about $44,956 |
| Lender fee (2%) | $9,660 |
| Broker fee, where one applies (1%) | $4,830 |
| Legal and appraisal (estimate) | about $2,100 |
| Effective first-year cost | about 13.2% of the net funds |
What's the term of a private first mortgage?
Usually 12 months. Common Ottawa exits: two years of incorporated income on file, a discharged consumer proposal, or the sale of another property. Check the prepayment terms so an early bank approval doesn't trigger an unexpected charge.
What are the criteria to get approved for a private first mortgage in Ottawa?
- Loan-to-value up to about 75% to 80% on houses; lower for condos and rural or cottage-country properties outside the city.
- An appraisal and clear title, with property taxes current.
- For purchases, a down payment of at least 20% to 25% plus Ontario land transfer tax and legal costs.
- Proof the monthly interest can be paid.
- A realistic exit to a bank, credit union or B lender.
Why are private first mortgage rates higher than traditional mortgages?
A private lender's capital comes from investors, the loan can't be insured, and the borrower has already been declined by a bank. The lender has 12 months to earn its return and cover the cost of underwriting and legal work — hence a higher rate and a lender fee, even in first position.
What are the pros and cons of a private first mortgage in Ottawa?
| Pros | Cons |
|---|---|
| Lowest-cost private option | Higher rate applies to your entire balance |
| Solves declined renewals and tight purchase deadlines | Fees on every new private loan |
| No municipal land transfer tax on Ottawa purchases | Interest-only: no principal paydown |
| Approval on equity, not bank ratios | Short term — the exit must work |
Sources
This article is general information, not financial or legal advice. Rate and fee ranges are typical of the private market in 2026 and vary by lender, property and file. Examples are illustrative and rounded, not market averages. Mortgage financing is subject to lender approval.
Frequently asked questions
Start early: a B lender or credit union may take the renewal. If not, a private first can pay out your bank at maturity while you fix the issue.
Ottawa has no municipal land transfer tax. Buyers pay Ontario's land transfer tax, with rebates available to eligible first-time buyers.
Sometimes, at lower loan-to-value and higher rates. Wells, septic systems and resale time all affect a private lender's appetite.
Often a few days once the appraisal is in, and funding within about a week.
Need a private first mortgage in Ottawa?
We'll compare Ontario private lenders and MICs, show every cost in writing, and plan your refinance back to a bank.