Private mortgage lenders are individuals, small funds and mortgage investment corporations that lend their own or pooled money against real estate, outside the bank system. They decide mainly on the property and the equity in it, which is why they can say yes quickly to files a bank or alternative lender has declined, and why they charge considerably more for doing so.
The private lenders listed here describe their own lending areas and criteria. In most provinces private money reaches borrowers through a licensed mortgage brokerage, and a broker who knows the private market is usually the fastest way to compare several offers rather than one.
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A private lender looks at three things first: what the property is worth, how easily it could be sold, and how much of that value you want to borrow against. Income and credit still matter, but they move the price rather than decide the answer. That is the whole reason private lending exists, it prices risk that other lenders will not take at all.
Terms are short, typically months to a couple of years, and most are interest-only. The mortgage is meant to be temporary, so a private lender will ask about your exit before it funds: a sale, a refinance once income can be documented, or a credit history repaired enough for an alternative or prime lender.
Private money is also used where speed matters more than price, a purchase that must close before conventional approval can be finished, a property type banks avoid, or an estate or separation that needs equity released quickly.
The interest rate is only part of the cost. Private mortgages usually carry a lender fee and a brokerage fee, often deducted from the advance, plus your own legal costs and an appraisal. There may be a renewal fee if the term is extended. All of these should be disclosed in writing before you sign.
Compare offers on the total dollar cost over the period you expect to hold the mortgage, not on the rate. Ask specifically what happens if you need more time, the renewal terms are where private borrowing most often becomes expensive.
The lender itself may or may not be licensed, depending on the province and how it operates, but the brokerage that arranges the mortgage and any company that administers it on behalf of investors generally must be. In Ontario that means an FSRA mortgage brokerage or mortgage administrator licence; other provinces have their own regulators and registers.
Listings on this site are supplied by the lenders themselves and are not checked by us. Before you proceed, look the lender or its brokerage up on the provincial regulator’s public register, and make sure your own lawyer, not one chosen by the lender, reviews the commitment.
A private lender advances money against a property, usually for a term of months to a couple of years, often interest-only. The decision rests mainly on the property’s value and your equity rather than on income and credit, and the lender expects a clear exit, a sale or a refinance, before the term ends.
Most borrowers reach private lenders through a mortgage broker who works with several of them, which lets you compare offers on the same file. You can also contact lenders directly from listings like these, but check the lender’s or its brokerage’s registration with the provincial regulator before sharing documents.
Usually a lender fee and a brokerage fee, often taken from the advance, plus legal and appraisal costs that are yours. A renewal fee may apply if you extend. Every fee should be disclosed in writing before you sign, and the honest comparison between offers is total dollar cost over the expected term.
In Canada the terms mean much the same thing: a non-bank lender that lends mainly on the value of the property. “Private mortgage lender” is the usual Canadian term; “hard money” is more common in the United States.
Only when an alternative (B) lender will not do the deal, or cannot do it in time. B lenders are cheaper and offer longer terms. Going private when a B lender would have approved the file is one of the most expensive mistakes in Canadian mortgages, and a broker who knows both markets is the usual safeguard.
