A private mortgage matures at the end of a short term, most commonly 12 months, and the full balance comes due. Plan to pay it out or renew, ask what renewal costs, and start three to four months before maturity.
Most private mortgages are short, so the end of the term arrives quickly, and many borrowers do not think about it until it is close. What happens at maturity is one of the most important questions to ask before you sign, and it is rarely the first one anyone asks. This guide covers how long terms usually run, what happens at the end, what a renewal can cost, and how to plan the exit. It is part of our wider guide to how private lenders differ and what to ask.
A private mortgage matures at the end of a short term, most commonly 12 months, and the full balance comes due. You can usually pay it out, often by refinancing into a bank or B-Lender mortgage or by selling, or in many programs you can renew or extend for a fee. Renewal is not a right, and if the mortgage is neither paid out nor renewed it can go into default. Start planning the exit three to four months before maturity.
Across the lender programs we work with, 12 months is the most common term, with 3, 6 and 24 months also common, and a few programs running longer. Short terms are part of how private lending works: the lender is lending against the property and expects to be repaid or refinanced within a year or two. The term is how long the interest rate and conditions are fixed, and it is also the deadline for the plan you shared when you applied.
Some mortgages are open, which means you can repay the balance in full or in part at any time, often after an initial period, without a penalty. Others are closed, and repaying early can mean a penalty, commonly a number of months' interest. This matters at the end of the term too, because an open mortgage is easier to pay out when a refinance comes through early. Ask which you have, and what the penalty is.
Many private mortgages are interest-only, so your payments cover the interest and none of the principal. That keeps the monthly cost low, but it means the full amount you borrowed is still owed when the term ends. A mortgage that is amortized pays some of the principal down as you go, though less than a bank mortgage would over the same period. Either way, the balance comes due at maturity, which is why the plan matters.
1. You pay it out. This is the usual and best outcome. You refinance into a lower-cost mortgage, often with a B-Lender or a bank once your situation allows, or you sell the property or receive funds you were expecting. We cover the lower-cost routes in private lender vs. B-Lender vs. bank, and borrowers recovering their credit can read how lenders treat credit and our credit rebuilding page.
2. You renew or extend. Many programs offer a renewal or an extension, usually for a fee. In the programs we see, a flat renewal fee of a few hundred dollars is common, and some programs charge a percentage of the loan instead. Renewal is the lender's decision, not a right. The lender may look at your payment history, the property and your plan, and it may change the rate or the terms.
3. It is not paid out or renewed. If the balance is not repaid and the mortgage is not renewed, it can be treated as being in default, and the lender can start enforcing its security. In Ontario, a lender using power of sale must follow the notice rules in the Mortgages Act, including that notice cannot be given until the default has continued for at least 15 days and the sale cannot happen until at least 35 days after notice is given. We explain what happens in our guide to a notice of sale. The best protection is to speak to the lender and your agent well before the maturity date.
Besides any renewal fee, a renewal can change your rate, and in some programs it can carry a new lender fee or require a new appraisal. Because the fees on private mortgages can be a large share of a small loan, it is worth knowing the total cost of renewing, not just the headline fee. Our guide to what you actually receive and owe on a private mortgage explains how costs add up.
Start three to four months before maturity. Know your options: refinance, sell, renew or extend. Ask your lender what a renewal would cost and under what conditions it is available. Check whether your credit, income or property has changed, so you know which lenders might say yes. And have a backup, because a refinance can fall through. If your plan depends on credit recovering, give yourself extra time.
Ask how long the term is and whether it is open or closed. Ask what the penalty is for repaying early. Ask whether renewal or extension is available, what it costs, and what the lender needs to see. Ask what happens if you cannot repay or renew at the end of the term. And ask for the answers in writing.
A private mortgage is a short-term tool, and it works best with a clear plan for the end. Know the term, know the cost of renewing, and start the exit conversation early. If you would like to talk through the exit before you commit, contact us and we will map out the options. This article is general information as of October 2026, not legal, tax or mortgage advice, and lender terms vary and change without notice.
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