Private mortgage costs are often discussed in terms of interest rates, but homeowners also need to understand monthly payment impact.
Because most private mortgages are interest-only, monthly payments may look manageable even though total borrowing costs are higher. Seeing real payment examples helps homeowners plan cash flow and avoid surprises.
This guide breaks down monthly private mortgage payments at different loan amounts using realistic Canadian pricing.
Key Assumptions Used in These Examples
To keep comparisons clear, the following assumptions are used:
- Interest-only payments
- 12-month loan term
- No principal repayment during the term
- Rates shown are examples, not guarantees
Actual payments will vary based on lender, risk, and structure.
Example 1: $100,000 Private Mortgage
Assumed interest rate: 12%
Monthly interest calculation:$100,000 × 12% ÷ 12 = $1,000 per month
Estimated annual interest cost:$12,000
This loan size is often used for:
- Small refinances
- Emergency expenses
- Short-term cash needs
Example 2: $250,000 Private Mortgage
Assumed interest rate: 12%
Monthly interest calculation:$250,000 × 12% ÷ 12 = $2,500 per month
Estimated annual interest cost:$30,000
This range is common for:
- Debt consolidation
- Bridge financing
- Mid-size refinancing needs
Example 3: $500,000 Private Mortgage
Assumed interest rate: 12%
Monthly interest calculation:$500,000 × 12% ÷ 12 = $5,000 per month
Estimated annual interest cost:$60,000
Larger loan amounts are often used for:
- Major refinances
- Property purchases with timing gaps
- High-equity short-term financing
How Payments Change With Different Interest Rates
Even small rate changes significantly affect monthly payments.
$250,000 loan examples:
- At 10% → ~$2,083 per month
- At 12% → ~$2,500 per month
- At 15% → ~$3,125 per month
Higher risk usually leads to higher monthly costs.
Interest-Only Payments vs Principal Repayment
Most private mortgages use interest-only payments.
This means:
- Monthly payments are lower
- Principal balance does not decrease
- Full repayment occurs at term end
Borrowers must plan for how the principal will be repaid through refinancing or sale.
Additional Costs Not Included in Monthly Payments
Monthly payment examples do not include:
- Lender fees
- Broker fees
- Legal costs
- Appraisal fees
These costs are usually paid upfront and affect total cost, not monthly payments.
Cash Flow Considerations for Homeowners
Before choosing a private mortgage, homeowners should assess:
- Whether monthly payments fit their budget
- How long the loan will realistically be needed
- Whether income is stable enough for the term
Private mortgages can strain cash flow if payments are underestimated.
What Happens at the End of the Term?
At the end of a private mortgage term, homeowners typically:
- Refinance with a bank or alternative lender
- Sell the property
- Renew or extend the private mortgage
Without a clear plan, renewal may increase costs.
Using Payment Examples to Plan an Exit Strategy
Monthly payment examples help homeowners:
- Decide how much to borrow
- Estimate total interest cost
- Plan refinancing timelines
Understanding payment obligations supports better decision-making.
Final Thoughts
Private mortgage monthly payments can appear manageable due to interest-only structures, but total costs add up quickly.
Reviewing realistic payment examples helps homeowners prepare financially and avoid overextending during short-term financing.
Note: Rates and costs vary based on your credit profile, available equity, and location.