Private Lending

Explore private lending in Canadian real estate, who offers it, when to use it, and how it compares to traditional bank financing.

Private Lending

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
Private lenders focus more on property equity than borrower income. These loans are useful for bridge financing, renovations, and time-sensitive deals, but they carry more risk and cost.
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

Additional Terms

Public Realm Improvements

Public realm improvements are enhancements to public spaces such as sidewalks, parks, plazas, and streetscapes, often funded or contributed by. more

Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

Green infrastructure refers to natural or engineered systems that manage stormwater, reduce heat, and improve sustainability in developments.. more

Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual 1% tax on the value of vacant or underused residential property owned by non-resident,. more

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