Private Lenders

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Private mortgage lenders play an important role in Ontario’s mortgage market by providing financing solutions for borrowers who may not qualify with traditional banks or credit unions.

Whether you have bruised credit, low income, mortgage arrears, tax debt, or need funding quickly, a private mortgage may provide access to financing when conventional options are unavailable.

Private mortgages are often used as short-term solutions designed to help borrowers stabilize their financial situation, improve their credit profile, or transition back to conventional financing.

Understanding how private lenders work, the benefits they offer, and the risks involved is essential before proceeding with a private mortgage.

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• What is Private Lender?
• How Can a Private Lender Help?
• What is an Exit Strategy
• What are the costs of a Private Mortgage
• What are the Risks of a Private Mortgage?
• How can a Mortgage Agent help?

What is a Private Lender?

A private lender is an individual investor or group of investors who lend money secured against real estate.

Unlike banks and institutional lenders, private lenders typically focus more on the property’s value and available equity than on traditional income qualification methods.

Private lenders may include:

• Individual investors
• Mortgage investment corporations (MICs)
• Private lending groups
• Syndicated investors

Private mortgage lenders operate differently than traditional banks.

While banks often have strict lending guidelines related to income verification, debt service ratios, and credit scores, private lenders generally place greater emphasis on:

• Property value
• Loan-to-value ratio (LTV)
• Available equity
• Exit strategy
• Overall risk assessment

Private mortgages are typically short-term solutions ranging from a few months to one year, although longer terms may sometimes be available.

In many cases, private mortgages are structured as interest-only payments, meaning the principal balance remains unchanged during the mortgage term.

Because private lenders assume greater risk than conventional lenders, private mortgage rates and fees are generally higher than those offered by banks.

For borrowers who require flexible financing solutions, however, a private mortgage can provide access to funds that may not otherwise be available.

How can Private Lenders Help?

Private lenders can assist borrowers who may not meet the qualification requirements of traditional lenders.

Many homeowners turn to private mortgage financing when they need a solution that prioritizes property equity rather than strict income and credit requirements.

Private lenders may be able to help in situations involving:

Challenged or Bruised Credit

A lower credit score does not automatically prevent approval for a private mortgage.

Many private lenders focus primarily on the property’s equity position rather than relying heavily on credit scoring models.

Low Income

Borrowers with lower reported income, variable income, or self-employment income may find private lending options more accessible than traditional bank financing.

Mortgage Arrears

Private lenders may provide solutions for homeowners who have fallen behind on their mortgage payments and need immediate financing to bring their mortgage into good standing.

Power of Sale Situations

Homeowners facing a power of sale may use private mortgage financing to stop legal proceedings and gain time to improve their financial position.

Rural Properties

Properties located in rural or remote areas sometimes present challenges for conventional lenders.

Many private lenders are willing to consider financing opportunities in locations that banks may not prefer.

Fast Funding Requirements

Traditional mortgage approvals can sometimes take several weeks.

Private mortgage financing can often be arranged much more quickly, making it useful when time-sensitive financing is required.

Limited Documentation

Private lenders may require less documentation than conventional lenders, which can simplify the approval process in certain situations.

For many borrowers, a private mortgage acts as a bridge solution while they work toward qualifying for a lower-cost conventional mortgage.

Other articles: How to Stop a Power of Sale
Other articles: Debt Consolidation
Other articles: Refinancing a Mortgage

What is an Exit Strategy

• It is critical to have an exit strategy.
• To Pay out an existing Private Lender contact our Agents for solutions.
• Most Private Mortgages are 1 year terms or less. Not having an exit strategy could incur very high renewal fees.
• Exist strategies may include:
  • move to conventional mortgage with conventional lender
  • renegotiate with current Private Lender before term ends
  • sell property
• Early termination may incur administration fees.
• Your Mortgage Agent should suggest exist strategies BEFORE you begin a Private Mortgage.

How our Mortgage Agents can Help

• Note Private Mortgage risks and benefits
• Find lowest private mortgage rates for your financial profile
• Negotiate with Private Lenders for the best terms
• Present multiple Lender offers from which you can choose
• Estimate max loan, rate and payments
• Explain your situation to Private Lenders
• Find Lenders for rural locations
• Find Lenders for lower income or bruised credit Borrowers
• Find Lenders to stop a Power of Sale

Power of Sale	Foreclosure	Refinancing
Second Mortgage	Payout POS	Alt Lenders

Private Mortgage
Next Steps

• Our Agents will review your situation and advise on risks of a Private Mortgage
• We calculate your home equity to understand how much can be accessed.
• We explain the risks and benefits
• We collect documents from Borrower
• Funds can flow as fast as 3 days

Other articles: How to Stop a Power of Sale
Other articles: Debt Consolidation
Other articles: Refinancing a Mortgage