A private mortgage ends one of three ways. You refinance with a B-lender or bank. You sell. Or you renew with the private lender and pay a new fee. Renewal is not automatic and not guaranteed. FSRA found six in ten private borrowers had no exit plan. One Ontario lender reported that about three quarters of its clients now renew privately instead of going back to a bank. The exit is the product. We write it on day one. It names the lender we expect to refinance with, and the three things that must be true by month nine. We check in at month nine.

What happens at the end of the term

Exit	What it needs	What it costs	When it is right
Refinance with a B-lender	12 clean payments, bank statements or NOAs, 20% equity, score about 600+	6.5-9% + 1% fee; discharge $300-800 on the private	Most self-employed, bruised-credit and proposal files
Refinance with a bank	Income under the stress test, 650-680+ score, two years since a proposal	4.5-5.5%, no fee	CRA payouts and bridge files where income was never the problem
Sell	A realistic listing started by month 6-8	Commission, discharge; no renewal fee	Downsizing, separation, estate, or when the numbers will never fit a refinance
Renew with the private lender	The lender's agreement, a new appraisal, clean payments	Renewal fee 0.5-2%, maybe a higher rate	A one-time delay. Not a plan.
Do nothing	-	Default interest, legal costs, enforcement	Never

The clauses to read before signing

Renewal fee. Is one charged, how much, and is it in the commitment letter? If renewal is not mentioned, assume it is not offered.
Automatic renewal. Some commitments renew automatically at a higher rate with a fee unless you give notice. A 5.99% loan with a 2% fee that auto-renews at +3.5% with a 4% fee is a 14% loan (Mortgage Professionals Canada, September 2026). An Ontario court in 2025 struck a $105,900 renewal fee charged after the lender's renewal right had expired. You do not want to be the test case.
Open or closed. Open after three months lets a faster refinance pay the loan out without penalty. Closed terms charge three months' interest or the remaining interest.
Default interest rate. The rate after a missed payment or after maturity. Often 3-5% higher.
Discharge and administration fees. $300-800 is normal. $2,000 is not.
Prepaid interest holdback. If the lender holds 12 months of interest from the advance, there are no payments to miss, but the money is yours and the registered amount is the full loan.

Every one of these goes on the one-page fee sheet you see before you commit. Your own lawyer sees them too.

The 12-month plan

Before funding

Name the exit

Which lender, on what documents, at what loan-to-value. If we cannot name one, we say so and talk about selling.

Month 1

Set up the file

One business account, automatic payment, two credit cards if rebuilding, tax filings scheduled.

Month 3

Open period starts

From here a faster refinance can pay the loan out without penalty.

Month 6

Mid-point check

Credit pull, statements review, value check. If selling is the exit, the listing goes up now.

Month 9

Submit to the exit lender

Two B-lenders or a bank. Approval in principle means the refinance closes by month 11.

Months 10-12

Pay out

New mortgage funds. Private discharged. Fee sheet reconciled. If something slipped, a short renewal is negotiated early, not at maturity.

The three things that must be true by month nine

Payments. Twelve months without a late payment on the private mortgage, and no new collections. B-lenders check the private lender's payment history.
Documents. Bank statements or NOAs that support the income the B-lender needs. Taxes filed. Nothing owed to CRA.
Value. The property still appraises so the refinance is under 80% loan-to-value. If the market has fallen we know by month six and adjust: a smaller refinance plus a small second, or a sale.

Why people get stuck, and how not to

Borrowers get stuck when the private mortgage was the plan instead of a step in the plan. Values stopped rising in 2024-26, so "renew and wait for appreciation" stopped working. Lenders report borrowers "left in the lurch where nobody will take them" when values come in low at renewal. The defence is boring: the exit lender named up front, a term with an open clause, no new debt during the year, and a month-nine review with time to fix what is wrong.

Exit strategy questions

What happens when a private mortgage term ends?

The full balance is due. If you have not refinanced or sold, the lender can offer a renewal (with a fee), charge default interest, or start enforcement. In Ontario that can be a Notice of Sale within weeks. The plan is to be refinanced by month 11.

Can a private lender refuse to renew?

Yes, and some do, especially in a falling market or if the lender's fund is under stress. That is why the exit is never "renew". If a renewal is needed for a few months, we ask at month nine, when you still have leverage.

How long before a B-lender will take me after a private mortgage?

Twelve months of clean payments on the private mortgage is the usual expectation. Many B-lenders are satisfied by the documents alone, regardless of how long the private mortgage has been in place. The private mortgage itself is not a mark against you.

Do I have to pass the stress test to leave a private lender?

With a bank, yes. With a B-lender, the test is applied more flexibly to bank-statement income, and some uninsured programs qualify at the contract rate plus a smaller buffer. With a smaller refinance plus a small private second, sometimes no.

What if my house value drops and the loan-to-value is too high at renewal?

We find out at month six, not month twelve. Options are a partial paydown, a smaller refinance with a small second, or a sale on your terms while there is still equity. Doing nothing is the one option that loses the equity.

Sources. FSRA consumer research on private mortgage exit strategies and Supervision Plan 2025-26 · Globe and Mail, private lender renewals, 2026 · Mortgage Professionals Canada, auto-renewal clause analysis, 24 September 2026 · Canadian Lawyer, Ontario renewal-fee decision, 2025 · BestRefinance, how to exit a private mortgage in Ontario.

Real people, not a call centre

Talk it through with a licensed broker before you decide

Tell us what is going on in a few lines. We call you back the same day with what lenders will say, what it costs in dollars, and how you get back to a bank. If private is the wrong tool, we say so.