Current Canadian mortgage rules, including the stress test, have made it more difficult for some people to get mortgages from traditional lenders, such as banks and credit unions. Those who are self-employed, first-time home buyers, new to Canada, or have credit challenges, are finding it particularly difficult.
As a result, more buyers are turning to private lenders to secure a mortgage.
Private lenders include mortgage investment corporations, investors who pool their capital (syndicated mortgages), or individuals lending their own money. According to the Bank of Canada these types of lenders have seen their share of the market in Canada double between 2015 and 2021.
Private lending can be an attractive business opportunity since:
If you are considering becoming a private lender, you will need to:
While private lenders are not regulated, mortgage brokers representing private lenders and borrowers in Ontario are licensed by FSRA.