Private Lending FAQs
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Are private lenders regulated in Canada?
Yes, but regulation and compliance depend on your province and the lender structure (individual, corporation, or MIC) and whether you work with a licensed mortgage broker.
Can I get a private mortgage with bad credit?
Often yes if you have enough equity and a realistic exit plan, but pricing and conditions are usually stricter than a bank.
Can I refinance out of a private mortgage early?
Usually yes, but minimum-interest and payout terms can make early repayment more expensive than you expect.
Can I use a private mortgage for a purchase, not just refinance?
Yes, private mortgages can fund purchases, especially when the closing timeline is tight or bank financing is not available in time.
Can self-employed borrowers qualify for private mortgages?
Yes, many self-employed borrowers use private lending as a short-term bridge when bank income verification is too restrictive.
What is the difference between a private lender and a MIC?
A private lender may be an individual or company, while a MIC (Mortgage Investment Corporation) pools investor capital and lends under a corporate structure.
How does a second mortgage work?
A second mortgage is registered behind your first mortgage so you can access additional equity without replacing the first loan.
How fast can a private mortgage close in Canada?
Many private mortgages can close in about 3 to 10 business days, but timing depends on appraisal speed, lender conditions, and legal readiness.
Is interest-only better than amortized payments in private lending?
Interest-only lowers monthly payments, but it does not reduce principal, so your exit plan at maturity matters more.
Can private mortgages help with tax arrears?
Yes, private financing is often used to quickly clear CRA or property tax arrears when there is urgent enforcement risk.
How long is a typical private mortgage term?
Private mortgage terms are usually short, often around 3 to 12 months, because the loan is meant to be transitional.
What documents do private lenders usually request?
Most private lenders want property and title details, existing mortgage payouts, and a clear explanation of the request and exit plan.
What fees should I expect on a private mortgage?
Private mortgages often include lender fees, broker fees, legal fees, and appraisal costs, so your net proceeds can be meaningfully lower than the loan amount.
What happens if I miss a private mortgage payment?
Missing a payment can trigger default interest, fees, and legal notices, and may lead to enforcement (power of sale or foreclosure) depending on your province and contract.
What is the maximum LTV for private lenders?
Many private lenders consider roughly 65% to 80% LTV, but the practical maximum depends on the property, location, and your exit plan.
How can I stop a power of sale or foreclosure?
You may be able to stop enforcement by paying arrears, refinancing (sometimes with private lending), or selling the property before key deadlines.
Can I consolidate credit card debt into my mortgage?
Yes, if you have enough equity you can use a refinance, home equity loan, or second mortgage to pay off high-interest unsecured debt.
Why is it hard for self-employed people to get bank mortgages?
Banks typically rely on documented, stable income on tax returns and apply strict qualification rules, which can understate a business owner's real cash flow.
What is a mortgage pre-approval in Canada?
A pre-approval estimates how much you can borrow and may hold a rate for a limited time, but it is not a final guarantee of funding.
Fixed vs variable mortgage: which is better?
Neither is universally better. Fixed offers payment certainty, while variable can be cheaper but exposes you to rate changes.
How does the mortgage stress test work in Canada?
Many lenders require you to qualify at a higher “stress” rate than your actual rate, which can reduce how much you can borrow.
How much down payment do I need in Canada?
Minimum down payment depends on purchase price, property type, and whether the home will be owner-occupied. Requirements can change, so confirm current rules with your lender.
What are typical mortgage closing costs in Canada?
Closing costs commonly include legal fees, land transfer taxes (where applicable), title insurance, appraisal, and adjustments. The total varies by province and property price.
What credit score do I need for a mortgage in Canada?
There is no single cutoff. Lenders look at your score, credit history, income stability, and debt ratios, and different lender types accept different profiles.
What is mortgage renewal in Canada and when should I start?
Renewal is when your mortgage term ends and you choose a new term and rate (with the same lender or a new one). Many borrowers start planning 3–6 months before maturity.
How is the penalty calculated if I break my mortgage early?
Penalties vary by lender and product. Variable-rate mortgages often use a simpler interest-based penalty, while fixed-rate mortgages may use a larger calculation (such as an interest rate differential).
What is a HELOC and how does it work?
A HELOC (home equity line of credit) is a revolving credit line secured by your home. You can borrow, repay, and borrow again up to a limit, and the interest rate is often variable.
What’s the difference between refinancing and renewing a mortgage?
Renewal is choosing a new term at the end of your existing term; refinancing is changing the mortgage mid-term (often to access equity, change terms, or switch lenders).
How can I improve my chances of getting approved for a mortgage?
Improve approval odds by strengthening documentation, reducing revolving debt, stabilizing income, and choosing a realistic price and down payment.
What is amortization and how does it affect my mortgage?
Amortization is the total schedule used to calculate payments. Longer amortization can lower the monthly payment, but usually increases total interest paid over time.
What’s the difference between an insured and uninsured mortgage in Canada?
An insured mortgage includes mortgage default insurance (often required with a smaller down payment). Uninsured mortgages generally have larger down payments and different rate and qualification dynamics.