Private Mortgage True Cost Calculator

What the Private Mortgage True Cost Calculator does

This calculator takes a private or second mortgage quote — a rate, a term, a lender fee and a broker fee — and turns it into the two numbers that actually matter: the net advance that lands in your account, and the true annualised cost once every fee is counted against that smaller amount, not the loan amount you signed for.

Private and second mortgages are routinely quoted in a way that understates their real cost. A "10.99%" rate with a 3% lender fee and a 2% broker fee on a one-year term is not a 10.99% loan — it is closer to 16% to 17% once the fees are annualised properly, and this calculator shows that number directly rather than leaving you to work it out.

• Your net advance — the cash that actually reaches you after fees
• The nominal rate and the true annualised cost, side by side
• What happens if you cannot exit at maturity, modelled at 1, 2 and 3 years stuck
• A cheaper-alternatives check — HELOC, refinance and B-lender first
• An exit-plan checklist for what your file needs to look like to refinance out

The key variables that move the answer — and how lenders treat them

Private lending is priced almost entirely on risk and speed, and the variables below explain why the numbers can look so different from a bank quote.

• Combined loan-to-value — private lenders will commonly go to 85% or 90% combined, well past what a bank or monoline will touch, and that extra risk is exactly what the higher rate and fees are pricing in.
• Fees relative to the term — a 5% combined lender and broker fee on a 12-month term is proportionally five times more expensive, annualised, than the same fee on a 5-year term. Private mortgages are almost always short terms, which is precisely why the fee structure matters so much more here than on a conventional mortgage.
• Whether fees are deducted from the advance — this single toggle changes what you actually receive versus what you owe. Borrowing $120,000 and receiving $114,000 while still owing $120,000 at maturity is standard in this market, and it is the detail that most surprises first-time private borrowers.
• Your exit plan — private lenders generally do not want you to stay past one term. What decides whether you can leave for a cheaper lender at maturity is your documented income, your credit, and your LTV at that point — not anything about the private loan itself.

How private mortgage costs are actually calculated

Private mortgages are almost always interest-only, so the interest cost over the term is simple: loan amount × rate × (term in months ÷ 12) — there is no amortization schedule to build because none of the payment reduces principal.

The net advance is the loan amount minus every fee that is deducted at funding: (lender fee % + broker fee %) × loan amount, plus flat legal and appraisal fees. The true annualised cost then measures total cost — interest plus every fee — against that smaller net advance, not the headline loan amount, and annualises it to match the term: (interest + total fees) ÷ net advance × (12 ÷ term in months). Comparing cost against the loan amount instead of the net advance, or failing to annualise a short term properly, are the two most common ways a private mortgage's real cost gets understated.

• Interest over the term: loan amount × rate × (term months ÷ 12)
• Total fees: (lender fee % + broker fee %) × loan amount + legal + appraisal
• Net advance: loan amount − total fees (when fees are deducted from funding)
• True annualised cost: (interest + total fees) ÷ net advance × (12 ÷ term months)

What you get from this calculator, and how lenders use these numbers

Every figure here is something a private lender, a broker or a regulator is already looking at — this calculator just puts it in front of you first.

• Net advance — the number a private lender is required to make clear to you before you commit, and the one that should drive your decision about whether the loan actually covers what you need it for.
• True annualised cost — the honest comparison point against any alternative, since the nominal rate alone systematically understates what a fee-loaded, short-term loan actually costs.
• Combined LTV — determines both whether the deal is possible at all and roughly how aggressively it will be priced; higher LTV means a higher rate and often higher fees.
• Cost if stuck — private lenders expect a one-term relationship. Knowing what a second or third renewal actually costs is the single best argument for building a real exit plan from day one rather than assuming you will simply renew.

Using your results well

Run the cheaper-alternatives check before you run anything else. A HELOC, a mainstream refinance or a B-lender option will very often do the same job at a materially lower true annualised cost than a private mortgage — private lending exists for files that genuinely cannot access those options, not as a default first choice, and a broker who steers you there without checking the alternatives first is not acting in your interest.

This calculator deliberately shows the exit-plan checklist and the stuck-for-years cost together, because the two are connected: a private mortgage without a credible plan to exit at maturity is not a bridge to something better, it is a recurring cost. If your file cannot realistically meet the checklist items within the term, that is worth knowing before you sign, not after your first renewal notice arrives.

• Compare the true annualised cost against a HELOC, refinance or B-lender option before proceeding
• Confirm every fee in writing before you commit — this is a regulatory requirement in Ontario, not a courtesy
• Build your exit plan on day one, not at renewal
• Budget for the net advance you will actually receive, not the loan amount you are signing for
• Treat the stuck-for-years figures as a real possibility to plan around, not a worst case you can ignore

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