Private Mortgage Lenders

Private Mortgage Lenders

Written by Caitlin Wood
Last Updated December 13, 2021

Private mortgages are a great alternative no matter what province you live in, whether you’re in a big city in Ontario or a smaller town in Quebec. Institutional lenders aren’t always willing or able to lend money to everyone, therefore private home loans are a great opportunity to get the money you need from a reliable source who wants to work with you. More often than not traditional lenders have to stick to strict lending guidelines, this makes it hard to lend to people with unique loan needs. Private lenders on the other hand work closely with their borrowers to make sure that all their unique needs are met and taken care of.

Whatever your financial situation looks like and no matter what type of mortgage you need, a private lender will more than likely be willing to give you a chance. If traditional lending institutions don’t seem like the right fit for you then considering a private lender is one of the best decisions you can make for you and your financial future.

What Are Private Mortgage Lenders In Canada?

A private mortgage lender is an individual or private company that lends out its own money. In Canada, these lenders are often referred to as B lenders or subprime mortgage lenders. Because they don’t fall under the same regulatory framework as regular mortgage lenders, they are able to offer mortgages to Canadians with poor financials or bad credit scores.

Types Of Private Mortgage Lenders

  • Individuals – These private mortgage lenders are simply individuals who lend out their money in hopes of gaining a return.
  • Mortgage Investment Corporations – Involves a group of investors who pool their funds and are able to lend to multiple people who meet their lending criteria.
  • Syndicate – This involves a group of investors who pool their funds for a single borrower or on a base-by-case basis.

When Should You Choose A Private Mortgage Lender?

Private mortgage lenders are great alternatives to more traditional mortgage lenders if you have poor financials or are struggling with bad credit. If one of the cases below fits your current mortgage situation then you should definitely consider working with a private lender. A private lender’s specialized service will give you peace of mind and help you through your unique mortgage journey.

  • If you require your payments terms to be more lenient
  • If your income debt ratio is significantly too high
  • If you’ve recently filed for bankruptcy and find that it’s hindering your ability to get a mortgage
  • If a past life event has drastically affected your credit score and is restricting you from getting a mortgage from a more traditional lender
  • If you want to purchase land or a house and don’t have enough cash to cover a down payment
  • If you have a lower than average income or a none-traditional income source and you find it’s affecting your ability to qualify
  • If you want to obtain a second mortgage to finance a renovation
  • If you wish to purchase a unique property

The great thing about private lenders is that you don’t need to fit into the cookie cutter idea of what a borrower is. So whether you fall into one of the above situations or you don’t, you’ll be able to find a private lender that’s right for you.

Why Choose a Private Mortgage

Choosing a private mortgage, even if you’re able to get one from an institutional lender, might be the best decision for your future. For the longest time the majority of people considered private mortgages to be a last resort option, this is no longer the case. Private mortgages are for anyone and everyone, especially those who want a personalized experience and easy to understand process.

There are many differences between private lenders and traditional lenders, depending on your situation one of these differences may be exactly what you need to make the best choice for you.

  • The application process. Private lenders often have online applications that don’t focus on scrutinizing every aspect of your financial life but rather focus on getting you the money you need.
  • The personalized service. With a private lender you receive a much more personalized service. The mortgage specialist that you work with will make sure they know all the ins and outs of your situation so that they can provide you with the best options.
  • Freedom of choice. One of the best things about a private mortgage is that you choose who you want to work with. Often people who choose to go with a traditional lender simply have to work with the only bank that will approve them. This can feel limiting and like you have no say in the process. There are more options available for those who choose private mortgages.

Working with Private Lenders

If you choose the right private lender, one that you’ve heard good things about and that has the right credentials, then working with them will be similar to working with a traditional lender. People often associate banks and other traditional lenders with stability and experiences, which is the truth but if you choose the right private lender then you’ll experience all that and more. Private lenders want to work for you and with you to get the home loan you need. If you’re still wary about which kind of lender you want to go with, here are

  • Ask questions. If you were to meet with a traditional lender you would more than likely ask lots of questions and make sure that you understood all the terms. So do the same with a private lender, they will be more than happy to answer all questions you have and ease any of your concerns.
  • Be prepared. Do you research, check for reviews online and make sure the private lender you choose is the best fit for you and your mortgage needs. Have a good understanding of your finances and know what you’re willing to accept and what you won’t accept. Your private lender will be prepared to meet with you, you should be too.
  • Understand the costs. A mortgage comes with fees and extra costs, no matter who you choose to borrow from. So the best thing you can do for yourself is know what those fees are before you make your decision. All lenders whether they are private or institutional have their own set of costs, so don’t choose a lender unless you’re comfortable with what they’re offering you.

It’s your money, your future and your home so if more traditional lenders can’t provide you with the mortgage you need then it’s in your best interest to choose a private lender. With a private home loan you’ll have more flexibility and the peace of mind that your lender is there to help you every step of the way.

Looking for More Information?

Rating of 4/5 based on 7 votes.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

Click on the star to rate it!

How useful was this post?

Research & Compare

Canada's Loan Comparison Platform

Largest Lender Network In Canada

Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.

Make Smarter Borrowing Decisions

Whether you have good credit or poor credit, building financial awareness is the best way to save. Find tips, guides and tools to make better financial decisions.

Save With Loans Canada

Special Offers

Earn 5% Cash Back With Neo

Earn 5% Cash Back With Neo
No annual fee!

Earn an average 5%¹ cash back at thousands of partners and at least 1%² cashback guaranteed.

View Offer
Build Credit With Refresh Financial

Build Credit With Refresh Financial

Build credit while spending money with the Refresh Financial VISA card.

View Offer
Build Credit For $7/Month

Build Credit For $7/Month

With KOHO’s prepaid VISA card you can build a better credit score for just $7/month.

View Offer
Industry Spotlight

What's happening with Canada's credit industry?

Lexop ⎯ Improving The Collection Process By Putting The Consumer First

Lexop ⎯ Improving The Collection Process By Putting The Consumer First

In an industry that doesn’t often put the consumer first, Lexop is changing the way companies manage their collection process. 

Read Post
Find The Best Rate
In Your Region
Best Personal Loan Provider by Greedy Rates

Confidential & risk-free

All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.

When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.

Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.

Your data is protected and your connection is encrypted.

Loans Canada Services Are 100% Free. Disclaimer

Keep Track Of Your Credit Score

Subscribe with Credit Verify to monitor your credit rating and get your free credit score.