Private Lending
Explore private lending in Canadian real estate, who offers it, when to use it, and how it compares to traditional bank financing.
May 22, 2025
What is Private Lending?
Private lending refers to borrowing money for real estate transactions from non-traditional lenders such as individuals, mortgage investment corporations (MICs), or private companies.
Why Private Lending Matters in Real Estate
In Canadian real estate, private lending offers flexible financing for borrowers who may not qualify with banks due to credit challenges, income verification issues, or unconventional properties.Private loans often feature:
- Shorter terms (6 months to 2 years)
- Higher interest rates
- Interest-only or balloon payment structures
- Fewer documentation requirements
Understanding private lending helps buyers and investors explore alternative funding when traditional routes are unavailable or impractical.
Example of Private Lending in Action
A borrower secures a 1-year, interest-only loan from a private lender to renovate a duplex before refinancing with a bank.
Key Takeaways
- Financing from non-bank sources.
- Offers faster approval and flexible terms.
- Higher cost and shorter duration.
- Often based on property equity.
- Useful for special or urgent situations.
Related Terms
- Bridge Financing
- Short-Term Financing
- Down Payment
- HELOC
- Alternative Financing
205 Queen Street, Brampton/Hazelview
CREA
Liam Gill is a lawyer and tech entrepreneur who consults with Torontonians looking to convert under-densified properties. (More Neighbours Toronto)
401-415 King Street West. (JLL)
Eric Lombardi at an event for Build Toronto, which is the first municipal project of Build Canada. Lombardi became chair of Build Toronto in September 2025.