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Why Private Mortgages Are Gaining Popularity in Canada

A modern Toronto home with financial data overlays, representing the rise of private mortgages in Canada’s housing market.

Private Mortgages: A Rising Trend in Canadian Financing

As Canada’s mortgage rules tighten, more borrowers are turning to private mortgages. Stricter regulations, like OSFI’s Loan-to-Income (LTI) ratio cap, have made it harder for individuals with non-traditional financial profiles to secure traditional loans. Private mortgages are filling this gap, offering flexible and fast financing solutions.

What Are Private Mortgages?

Private mortgages are loans provided by individuals or private companies rather than traditional financial institutions.


They are often tailored to borrowers who:

  • Have non-traditional income, like self-employed individuals.

  • Face credit challenges or high loan-to-income ratios.

  • Require financing for unique or unconventional properties.

Unlike traditional lenders, private lenders prioritize the property’s value and potential over the borrower’s financial history.

Why Are Private Mortgages Becoming More Popular?

Recent statistics show a significant rise in private lending in Canada. According to a 2023 CMHC report, private lenders now represent an estimated 10–15% of the Canadian mortgage market.


This shift is driven by:

  1. Stricter Regulations:

    • Policies like the LTI ratio cap and stress test rules disqualify many borrowers from traditional loans.

    • Private lenders provide an alternative for those who don’t meet bank criteria.

  2. Increased Flexibility:

    • Approval processes focus on the property rather than rigid income or credit requirements.

    • Private mortgages are ideal for borrowers with unconventional financial circumstances.

  3. Faster Approvals:

    • Unlike traditional banks, private lenders offer quick decisions, making them a go-to option for time-sensitive situations.


Advantages and Considerations

Advantages of Private Mortgages:

  • Flexibility: Ideal for self-employed individuals, poor credit histories, or unique properties.

  • Speed: Quick approvals and access to funds.

  • Custom Solutions: Tailored terms that meet specific financial needs.


Considerations:

  • Higher Costs: Interest rates range from 8–12%, with fees often between 2–4%.

  • Short-Term Focus: Most private mortgages are designed for 1–3 years, requiring refinancing or repayment sooner.


Is a Private Mortgage Right for You?

Private mortgages are best suited for:

  • Buyers who need a short-term solution while addressing financial challenges.

  • Investors financing unconventional or high-risk properties.

  • Borrowers navigating immediate needs, like bridging a financing gap.


How Seventy Seven Park Can Help

At Seventy Seven Park, we specialize in connecting clients with trusted private lenders. Here’s how we support you:

  • Tailored Solutions: We find financing options designed specifically for your needs.

  • Trusted Network: Access our established relationships with private lenders to secure the best terms.

  • Full Support: From evaluation to approval, we guide you every step of the way.


📞 Let’s Talk. Contact us today to explore how private mortgages can work for you.

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