Private Mortgages in Ontario: How They Work, the Rules and the Legal Steps

A private mortgage is a loan from an individual investor or private lending company, secured by a charge registered on the title of the property. It is often used by borrowers who cannot qualify with a bank or credit union, for example because of self-employment income, credit history or the condition of the property. FSRA says private lenders often lend based on the value of the property instead of the borrower’s income. See FSRA, what you need to know about private mortgages.

Under the Mortgage Brokerages, Lenders and Administrators Act, 2006, a person is a mortgage lender when they lend money in Ontario on the security of real property or hold themselves out as doing so, and no one may carry on business as a mortgage lender without a brokerage licence or an exemption (section 4). Collecting borrower payments for another person and passing them on is administering mortgages, which needs its own administrator licence unless exempt (section 5). Exemptions exist, for example for financial institutions, for simple referrals that meet the conditions, and for lawyers in prescribed circumstances (section 6). Whether a particular lender is carrying on business, or fits an exemption, depends on the facts, so check before you lend. See the Act on Ontario.ca.

FSRA says a borrower who needs an alternative or private lender must work with a Level 2 mortgage agent or a mortgage broker, and that a licensed broker or agent must disclose any material risks of the mortgage in writing and in plain language before you sign. You can check whether someone is licensed with FSRA’s licence look-up. See also FSRA, mortgage brokering.

See Criminal Code, section 347, the Criminal Interest Rate Regulations and the Interest Act. Because fees are counted, lenders and borrowers should have the whole cost of the loan reviewed before the documents are signed.

If the borrower falls behind, the lender can enforce the mortgage. Under the Mortgages Act, when the mortgage gives a power of sale, notice cannot be given until the default has lasted 15 days, and the property cannot be sold until at least 35 days after notice, with the borrower able to pay what is owed before the sale. See our power of sale guide for the process, and our power of sale service for help on either side.

• Is the person or business arranging the loan licensed? Check FSRA’s look-up.
• What is the total cost, including every fee, and how does it compare with the legal limit?
• What is my exit strategy when the term ends? FSRA says you need a realistic plan to qualify for cheaper financing.
• Am I paying interest only, and what do I still owe at the end?
• What fees apply for late payment, lapsed insurance or upkeep?
• What does the agreement say about paying the loan off early?
• What happens if I default?

• Confirm that you hold the licence you need or fit an exemption, and that anyone collecting payments for you is licensed to administer mortgages.
• Search title and confirm the property, the owner and what ranks ahead of you.
• Confirm the equity in the property and the borrower’s plan to repay.
• Count every fee and charge when you test the cost against the criminal interest rate.
• Make sure the documents state the principal and rate clearly, and register the charge.
• Arrange insurance, and know your enforcement route if the borrower defaults.

We represent both borrowers and private lenders in mortgage transactions across the GTA. That includes drafting and reviewing private mortgage agreements, verifying title, equity and priority, registering the charge, advising on compliance with Ontario lending laws including the criminal interest rate, and acting if a loan goes into default. We serve clients in English, Hindi and Punjabi. Call (647) 696-8069 or book a free consultation below, and we provide our fee during your consultation. See our private lending service, our mortgage transactions service and our refinancing service.

Legal Information, Not Legal Advice. This guide summarizes the Mortgage Brokerages, Lenders and Administrators Act, 2006, FSRA guidance, the Criminal Code, the Criminal Interest Rate Regulations and the Interest Act as shown on the official sites on October 27, 2026. Exemptions, limits and the law can change and depend on your facts, so speak with a real estate lawyer before you borrow or lend.