Private Mortgages

Private mortgage lenders provide a viable short-term financing option for individuals seeking alternatives to traditional bank loans. While private mortgages come with higher interest rates and additional fees, they offer faster approvals and less stringent requirements compared to big banks.

Private mortgages are often the go-to solution for borrowers facing unique financial situations, such as:

Individuals with bad credit
Borrowers relying on foreign or irregular income sources
Newcomers to Canada without an established employment history

These mortgages are typically intended as a temporary solution to bridge financial gaps while you work to improve your credit or financial standing.

Who Are Private Mortgage Lenders?

Private mortgage lenders are individuals and private companies that lend their own capital, including Mortgage Investment Corporations (MICs), where funds from private investors are pooled to support syndicated mortgages. Unlike traditional banks, private lenders do not accept public deposits and are therefore not subject to federal or provincial regulations.

Private mortgages are usually short-term loans with higher interest rates and fees compared to those offered by traditional mortgage lenders. They are typically designed as a temporary financing solution, giving borrowers time to transition back to conventional mortgage options.

Flexible Qualification Criteria:

Private lenders often have more lenient requirements, making it easier for individuals with non-traditional income sources or credit histories to secure financing.

Quick Approval and Funding:

The approval process with private lenders is typically faster, allowing borrowers to access funds promptly, which is beneficial in time-sensitive situations.

Short-Term Financing Solutions:

Private mortgages are suitable for short-term needs, such as bridging loans or financing property renovations, providing flexibility for various financial strategies.

Alternative Property Financing:

Private lenders may be more willing to finance unique or unconventional properties, including fixer-uppers or investment properties, that traditional lenders might not consider.

Some of Private Mortgage Lenders in Canada

Private mortgage lenders in Ontario offer alternative financing solutions, especially for those who may not meet traditional lending criteria. Below is a list of some private mortgage lenders in Ontario, along with their approximate interest rates:

Additional Fees:

Private mortgages often come with various fees that can significantly impact the overall cost of borrowing. Common fees include:

🔹Lender Fees: Typically range from 1.5% to 4% of the mortgage amount.

🔹Broker Fees: Usually match the lender fees, ranging from 2% to 4%.

🔹Appraisal Fees: Approximately $500 plus HST for single-family homes in

Ontario.

🔹Legal Fees: Generally around $1,500.

It's essential to consider these fees alongside the interest rates when evaluating private mortgage options, as they contribute to the total cost of borrowing.

For personalized assistance in navigating private mortgage options and connecting with suitable lenders, Ezy Loans & Mortgages is here to help.

Important Disclaimer:

Please note that these rates are approximate and can vary based on factors such as loan-to-value (LTV) ratios, property location, and the borrower's financial profile. Additionally, these rates are not updated daily.

📞 To check the latest rates and find the best private mortgage solution for your needs, please contact us at Ezy Loans & Mortgages!

Who can private mortgage lenders help?

Private mortgage lenders help fill the gap left by traditional lenders. Those with a limited Canadian credit history, such as new immigrants, may face additional hurdles when trying to get mortgage approval from banks. Mortgage brokers can also help those with difficulties getting approved for a mortgage. Other benefits can be found on our page about mortgage brokers vs banks. Meanwhile, private lenders can help the following borrowers.

New Immigrants

Newcomers to Canada may need to start from scratch with Canadian credit history, as Equifax and TransUnion only track credit within the country. Some lenders offer newcomer mortgages to help, but limited Canadian employment history can be a barrier. For example, RBC requires a 35% down payment for new immigrants without two years of Canadian employment history, along with a letter of reference from their home bank.

Self-Employed

Banks typically require two years of employment history to verify a steady income. Self-employed borrowers may face challenges, especially if their income fluctuates, such as those earning from commission or tips.

Foreign Income

Borrowers with foreign income may struggle to qualify for a mortgage, especially if their income is not easily verified. However, exceptions exist. For example, BMO requires a 35% down payment from foreign clients to qualify, while Scotiabank mandates verification of foreign income if the down payment is less than 50%.

Why Consider a Private Mortgage Lender?

If your credit score is below 600 or considered subprime, you may find it difficult to secure a mortgage through traditional lenders. Private mortgage lenders provide a valuable solution for those who don’t meet the strict credit score requirements of banks and mainstream lenders.

Mortgage lenders typically assess your credit score to determine your financial health, which directly impacts your ability to get approved for a mortgage.

To improve your credit score, ensure you:

🔹Make payments on time

🔹Maintain a low credit utilization rate

🔹Keep credit card balances low or at zero

🔹Build a long and consistent credit history

For CMHC mortgage insurance, a minimum credit score of 600 is required. However, if you don’t qualify for CMHC insurance, you may be excluded from many B lenders who deal with insured mortgages. Additionally, some lenders may still require mortgage insurance even if you’ve made a down payment of over 20%.

If you’re unable to meet these requirements, a private mortgage lender can offer a solution by providing more flexible approval criteria

Private Mortgage Lenders vs. Banks

If you've been denied by banks due to Canada’s mortgage stress test, a private mortgage lender may be your solution. Unlike Big Six Banks, chartered banks, and most credit unions, private lenders aren't required to conduct a stress test, making them a great option if you don’t qualify under traditional rules.

Private Lender Fees

Unlike traditional lenders, private mortgage lenders in Canada are not regulated, meaning they set their own rates, fees, and lending conditions. This can lead to significant differences in borrowing costs. For example, one lender may offer 8% with no fees, while another might advertise 6%, but after fees, the effective annual rate could exceed 9%. Simply comparing interest rates doesn’t reflect the total cost of borrowing.

Private Mortgage Lenders vs B Lenders

Both private lenders and B Lenders have looser lending requirements than A Lenders and do not require a mortgage stress test. However, B Lenders, like Mortgage Finance Companies (MFCs), primarily offer insured mortgages with higher loan-to-value (LTV) ratios and must meet CMHC requirements for credit scores, purchase price limits, and amortization periods. Private mortgage insurers like Canada Guaranty and Sagen offer alternatives to CMHC

50% to 85% LTV

Private lenders primarily offer uninsured mortgages, which carry higher risk and require borrowers to have sufficient home equity. According to CMHC, private mortgage loan-to-value (LTV) ratios typically range from 50% to 85%.

Most private lenders focus on first mortgages (78% of private mortgages) rather than second mortgages, as lower LTV ratios and higher credit priority help protect them against defaults or declining home prices.

Private Mortgages: An Alternative Solution

Learning Centre

Staying Ahead: Smart Mortgage Moves in Uncertain Times

In an economy filled with unpredictability, especially when job security feels shaky, being financially prepared can bring peace of mind....

Beware of Mortgage & Title Fraud: What Every Homeowner Needs to Know

In a world where identity theft and financial scams seem to be everywhere, protecting your home—the biggest investment you’ll likely ever...

Making the Most of Your Home Equity

For many Canadians, buying a home is more than just putting down roots—it's also a smart long-term investment. Whether it's for the sense...

Finding a Private Mortgage Lender with Ezy Loans & Mortgages

At Ezy Loans & Mortgages, we make it easy to connect with trusted private mortgage lenders through our network.

We will:
🔹Help you find the best mortgage solution for your financial situation
🔹Negotiate with private lenders on your behalf
🔹Handle paperwork and streamline the approval process

Looking for a private mortgage lender?
Let Ezy Loans & Mortgages connect you with the right professionals today!