Free · An estimate, not an offer of credit
Private Mortgage True Cost Calculator
The cash a private or second mortgage actually puts in your account, what it costs once every fee is annualised against that smaller sum, and whether a cheaper lender could do the same job — priced, not just mentioned.
Your quote
- Quoted rate
- 10.99%
- Cash you receive
- $112,000
- Monthly payment
- $1,099
- Owed at maturity
- $120,350
Your house is not the problem
At 73.3% combined loan-to-value there is $180,000 of room under a conventional 80% refinance, and you are asking for $120,000. The equity covers it. What is stopping you is the file, and fixing that is worth about $13,200 in the first year.
Room in the house and access to that room are different questions. Most calculators in this category name the cheaper options and never check whether either is open to you.
On a 12-month term the fees are spread over 12 months and then charged again. Staying three years costs about $56,148 — the fees alone come to $15,373, which is 1.9 times what you are paying to set it up.
Before you sign a private term sheet, get a second opinion from a broker with no fee riding on the placement. If a cheaper lender will take your file, that is worth knowing now rather than at renewal.
Talk to a brokerThe rate you were quoted, against the one you pay
Every fee measured against the $112,000 that actually reaches you, annualised over 12 months. A simple annualisation rather than a compounded rate — the convention cost-of-borrowing disclosure uses.
- The rate you were quoted
- 10.99%
- What the fees add
- 7.93%
- What it actually costs
- 18.92%
What arrives, against what goes back
You receive $112,000 and repay $120,350. That is $8,350 of ground to make up before the loan has done anything for you — so work backwards from the cash you actually need, not forwards from a round number.
- Reaches your account
- $112,000
- Lender and broker fees
- $6,000
- Legal and appraisal
- $2,000
- Owed at maturity, including discharge
- $120,350
Cheaper money, priced against your own figures
Room under each ceiling, and what a year of it would cost, set against this quote. Having room is a question about your house; being approved for it is a question about your file. Both matter, and only the first can be calculated.
Standard mortgage pricing, a real amortization, and no term to renew in a year
It does not cover this on its own, so it cannot replace the private loan by itself.
Priced above a bank and well below private, and built for exactly the files banks decline
$13,200 more than the cheapest option that has room for what you want.
What you receive, and what you repay
- Face amount of the loan
- $120,000
- Total fees5.0% of the loan ($6,000) plus $2,000 of legal and appraisal
- $8,000
- Cash that reaches youAfter the fees are taken off at funding
- $112,000
- Owed at maturityThe face amount plus a $350 discharge fee
- $120,350
- Behind on day oneThe difference between what arrives and what has to go back
- $8,350
The quoted rate against the real one
- Quoted rate
- 10.99%
- True annualised costInterest plus every fee, measured against the net advance and annualised to the term. A simple annualisation, not a compounded rate
- 18.92%
- What the fees addThe part of the cost the term sheet does not state
- 7.93%
- Monthly interest-only paymentNothing in this payment reduces the balance
- $1,099.00
- Total cost over 12 months$13,188 of interest and $8,000 of fees
- $21,188
Against the house
- Home value
- $900,000
- First mortgage
- $540,000
- Combined loan-to-valueInside the 90% most private lenders will go to
- 73.3%
- Room under a conventional refinanceMore than you are asking for — the equity is not what is stopping you
- $180,000
If you cannot get out at maturity
- Still here after 1 year$13,188 of interest and $8,000 of fees, with the balance grown to $120,000
- $21,188
- Still here after 2 years$26,777 of interest and $11,650 of fees, with the balance grown to $123,650
- $38,427
- Still here after 3 years$40,775 of interest and $15,373 of fees, with the balance grown to $127,373
- $56,148
What has to change before you can leave
- Pull your own report from both bureaus now and dispute anything wrong on it — errors are common and take months to clear
- 1
- Bring every account current and keep it current; recent history weighs far more than old history
- 2
- Get revolving balances under 30% of their limits, which moves a score faster than almost anything else
- 3
- Open nothing new, and let no one else pull your credit, until the refinance is funded
- 4
- Start the refinance conversation at least 90 days before maturity, not when the renewal notice arrives
- 5
Before you sign
If the equity is there, price the cheaper routes properly rather than taking this page’s word for it. Both of these use the same ceilings and your own numbers.
A planning estimate from the figures you enter, not an offer of credit or legal advice. Private lending is priced deal by deal, so treat every default here as a placeholder for your own term sheet. In Ontario, FSRA requires private mortgage costs and fees to be disclosed to you in writing before you commit — if a fee has not been put in writing, ask for it before you sign anything. The true annualised cost is a simple annualisation of interest plus all fees against the net advance, not a compounded APR, and it is not the cost of borrowing figure your lender is required to disclose — compare the two. Renewal costs assume the percentage fees recur on the balance then outstanding, with a fresh appraisal and a renewal legal cost, and that deducted fees capitalise; your lender’s renewal terms may differ materially and are worth getting in writing before the first term, not the second. Room under the refinance and line-of-credit ceilings is calculated from the value you entered and assumes a lender’s appraisal agrees with it; having room is not the same as being approved for it. Comparison rates are the figures you entered or their defaults, not quotes.
Are you a broker or brokerage?
Build a branded calculator for your website
Put this calculator on your own site in your own colours, free. Someone pricing a private term sheet is a live file today and, if the equity is there, a conventional deal you can actually place — and every visitor who asks for their numbers is emailed a PDF in your branding, with the lead emailed to you.
- Your colours and corner style
- One iframe snippet
- Every lead is yours
- No fee, no cap
What this calculator does
A private or second mortgage is quoted as a rate, and the rate is the least informative number on the term sheet. This page takes the whole quote — rate, term, lender fee, broker fee, legal and appraisal — and produces the two figures that actually describe the loan: the cash that reaches your account, and what that money costs once every fee is measured against it and annualised to the term.
It then does the thing most calculators in this category avoid. It prices the cheaper alternatives against your own numbers rather than listing them, and it tells you whether the equity in your house already covers what you are asking for. If it does, the constraint is your file rather than your home, and that is a fixable problem worth a great deal of money.
None of this is an argument that private lending is wrong. It exists for files that genuinely cannot reach a mainstream lender, and for those files it is the right answer. It is the wrong answer when nobody checked.
- The net advance — the cash that actually arrives, after fees
- The true annualised cost against the quoted rate, side by side
- A refinance, a line of credit and a B-lender, priced on your figures
- What a second and third term cost, with the fees compounding onto the balance
- An exit checklist written for the specific reason you are considering this
The quoted rate is not the cost
Two things separate a private mortgage’s quoted rate from what it costs, and both push the same way. Fees are normally deducted at funding, so you receive less than the sum you owe. And the term is short, so a fee fixed in dollars is spread across very few months before it is charged again.
Take the default quote on this page: $120,000 at 10.99% for twelve months, with a 3% lender fee, a 2% broker fee, $1,500 of legal and a $500 appraisal. The fees come to $8,000, so $112,000 arrives. The interest is $13,188. Total cost $21,188 against $112,000 received, over twelve months, is 18.92% — not 10.99%, and not the “16% to 17%” that a well-known version of this calculator states in its own prose while computing 18.92% in its own engine.
That is roughly eight percentage points the term sheet does not mention. It is not hidden, exactly — every component is disclosed — but it is never added up, and adding it up is the whole job.
- Fees are deducted at funding, so the advance is smaller than the debt
- A short term spreads a fixed fee across very few months
- On the default quote: 10.99% quoted, 18.92% actual
- The gap is about eight percentage points, and it is arithmetic, not opinion
- Compare the true annualised cost against alternatives, never the quoted rate
You start behind
On the default quote you receive $112,000 and you owe $120,000, plus a discharge fee to get the charge off title at the end. That is $8,350 of ground to make up before the loan has done anything for you at all.
This is standard in the market and it is not a trick — you signed for the face amount and the fees were disclosed. But it changes what you should be borrowing. If you need $120,000 in hand, you need to borrow more than $120,000, and the fees on that larger amount are larger again. Working backwards from the cash you actually need is the right way round, and almost nobody does it.
It also means the loan has to achieve something worth more than the gap. Consolidating debt at a genuinely higher rate can clear that bar easily. Covering a shortfall that will simply recur next year does not.
- You repay the face amount and receive the face amount less fees
- The discharge fee at the end widens the gap further
- Borrow backwards from the cash you actually need, not forwards from a round number
- The loan has to be worth more than the day-one gap to make sense
- A recurring shortfall is not something a one-year loan fixes
Check the cheaper money first — properly
Nearly every private mortgage calculator says to check a HELOC, a refinance or a B-lender first. Almost none of them checks. This one prices all three against the equity you actually have and tells you which ones have room for what you are asking.
On the default figures the result is uncomfortable. The combined loan-to-value with the second mortgage is 73.3%, and a conventional refinance runs to 80% — leaving $180,000 of room against the $120,000 wanted. The cheaper option covers the entire requirement, and costs about $13,200 less in the first year even after its own legal and appraisal costs are counted.
The honest reading of that is not that the borrower is being cheated. It is that the house was never the constraint. Somebody at 73% loan-to-value being offered private money is being offered it because of credit, or documentable income, or a closing date — and those are questions about the file, which can be worked on. That distinction is the most valuable thing on this page, and it is why the calculator asks why you are here.
- A refinance to 80% and a line of credit to 65% are both priced on your equity
- The page states plainly whether either has room for what you want
- On the defaults the refinance covers it entirely, about $13,200 cheaper in year one
- If the room exists, the constraint is the file rather than the house
- Private lending is right when the room genuinely is not there — and only then
Renewal is where it gets expensive
Private lenders do not expect a long relationship, and the pricing assumes you will leave. What happens if you cannot is the part borrowers rarely see modelled, because the fees do not happen once — they happen again at every renewal, and where they are deducted at funding they are added to the balance, so the next year’s interest is charged on a larger number.
On the default twelve-month quote, one year costs $21,188. Three years costs about $56,100, and the balance has grown from $120,000 to roughly $127,400 while every payment made was interest-only. Nothing has been repaid. The debt is larger than the day it was written.
That is not a worst case. It is what happens when the exit plan was “we will refinance next year” and next year arrived with the file in the same condition. The way to avoid it is to decide, before signing, exactly what has to be true at maturity for a cheaper lender to take you — and to start that work in the first month rather than the last.
- A renewal fee recurs at every renewal — the fees are not a one-off origination cost
- Deducted fees capitalise, so the balance grows and interest grows with it
- Three years on the default quote: about $56,100, with the balance up to $127,400
- Interest-only means none of it came off the principal
- Renewal terms vary widely and are rarely volunteered — ask for them in writing
Your fees have to be in writing
In Ontario, FSRA requires the costs and fees on a private mortgage to be disclosed to you in writing before you commit to the loan. This is a rule, not a courtesy, and it exists precisely because the fee load is where the cost of these loans lives.
The practical version: ask for every number on paper before you sign anything. The lender fee, the broker fee, the legal cost, the appraisal, what happens at renewal and what the discharge costs. A broker or lender who is comfortable with the deal will send that without friction. Reluctance to put a figure in writing is information about the deal, and it is worth acting on.
This page is not legal advice and cannot tell you what applies to your specific transaction. Confirm your own position with a licensed professional — but go in knowing the disclosure obligation exists.
- Ontario requires written disclosure of private mortgage costs before you commit
- Ask for the renewal and discharge terms too, not only the origination fees
- Get a second opinion from a broker with no fee riding on the placement
- Reluctance to put a number in writing is a reason to slow down
- Confirm your own position with a licensed professional — this is not legal advice
Using your results well
Read the cheaper-alternatives section before anything else. If a refinance or a line of credit has room for what you need, the question stops being what the private loan costs and becomes what is stopping the cheaper one — which is a much better question to be asking.
If the room genuinely is not there, use the true annualised cost as your comparison number against every other private quote you receive. Rates on term sheets are not comparable to each other; costs computed this way are.
And treat the exit checklist as work with a deadline rather than intentions. It is written for the specific reason you gave, and the three-year figure on this page is what happens if none of it gets done.
- Settle the cheaper-alternatives question before comparing private quotes
- Compare private lenders on true annualised cost, never on the quoted rate
- Work backwards from the cash you need, since fees come off the top
- Put dates on the exit checklist and start in month one
- Get every fee in writing before you sign, including renewal and discharge
Common questions
What does a private mortgage actually cost, versus the quoted rate?
Much more than the rate suggests. On a typical quote — $120,000 at 10.99% for twelve months with a 3% lender fee, a 2% broker fee, $1,500 of legal and a $500 appraisal — the fees total $8,000, so $112,000 reaches you while you owe $120,000. Total cost of $21,188 against $112,000 received over twelve months works out to 18.92%, about eight percentage points above the quoted rate. Every component is disclosed; what is missing is anyone adding them up.
Why is the amount I receive less than the amount I borrow?
Private lenders normally deduct the lender fee, broker fee, legal costs and appraisal directly from the advance at funding. You still owe the full face amount at maturity, plus a discharge fee to clear the charge from title. On the default quote here that is $112,000 received against $120,350 to repay — you are $8,350 behind before the loan has done anything. If you need a specific sum in hand, work backwards to the face amount rather than forwards from a round number.
Should I take a private mortgage or a HELOC?
A line of credit is far cheaper if you can get one, so the real question is whether you have the room and whether a lender will approve you. This calculator prices both against your own equity: a standalone line of credit runs to 65% of value, a refinance to 80%. If either has room for what you want, the private quote is worth roughly $13,200 more a year on typical figures, and the thing to investigate is what is blocking the cheaper option rather than which private lender to use.
What happens if I cannot refinance out at maturity?
You renew, and the fees are charged again — they are not a one-off origination cost. Where fees are deducted at funding they are added to the balance, so it grows and the next year’s interest is charged on more. On the default twelve-month quote, three years costs about $56,100 and leaves a balance near $127,400 against the $120,000 borrowed, with every payment having been interest-only. That assumes a two-point renewal fee rather than a second full origination — ask what yours would actually be. Ask what a renewal costs before you sign the first term.
How much will a private lender lend against my home?
Most stop around 90% of value including your existing first mortgage, which is well beyond what a bank or monoline will do and is most of why the pricing is what it is. The calculator shows your combined loan-to-value and flags when you are past that ceiling, which usually means a smaller advance, a higher rate, or a decline rather than a deal on the terms you were quoted.
Are private mortgage fees legal, and do they have to be disclosed?
Lender and broker fees are standard and lawful in this market, but in Ontario FSRA requires them to be disclosed to you in writing before you commit to the loan. Ask for every figure on paper — origination, renewal and discharge — and treat reluctance to provide it as information about the deal. This is not legal advice; confirm the rules that apply to your transaction with a licensed professional.
Is a private mortgage ever the right choice?
Yes. When the equity genuinely runs out before a mainstream lender will go, when income cannot be documented in the form a bank requires, or when a closing date leaves no time for a conventional approval, private lending does something nothing else does. What makes it the wrong choice is being used as a substitute for asking a cheaper lender properly — which is why this page prices the alternatives instead of merely mentioning them.
Next step
Get a second opinion before you sign the term sheet.
Private lending is the right answer for files that genuinely cannot reach a mainstream lender, and an expensive substitute for asking properly when they can. The difference is worth thousands in the first year alone, and the only way to know which you are is to have someone with no fee riding on the placement look at it. Mortgage Directory lists licensed brokers across Canada — placement is never sold, and an enquiry goes to one broker only.