Toronto Private Lending Lawyer
Private Lending Lawyer Toronto: Alternative Real Estate Financing Solutions
Private lending has become an increasingly important part of the GTA real estate market. For borrowers who do not qualify for conventional bank financing due to self-employment income, credit history challenges, or properties that do not meet traditional lending criteria such as those needing significant repairs, private mortgages offer a viable and often faster alternative.
For investors, private lending offers attractive, secured returns backed by real estate. Private mortgages are secured by a registered charge on the property title, giving the lender a legal interest in the property that ranks ahead of unsecured creditors.
At Sarkaria Sethi LLP, we represent both borrowers and private lenders in mortgage transactions throughout the GTA. We ensure the documentation is properly prepared, the security is correctly registered on title, and all parties understand their legal rights and obligations under Ontario law.
Understanding Private Mortgages
A private mortgage is a loan secured by real estate from an individual investor or private lending company rather than a traditional financial institution. Private mortgages typically offer faster approval and more flexible terms than conventional bank financing, but they come with higher interest rates (typically 8% to 14% depending on risk) and may have shorter amortization periods. The loan-to-value ratio is typically lower than conventional mortgages, meaning the borrower needs more equity in the property.
Our Private Lending Services
- Drafting and review of private mortgage agreements
- Title search and verification of property equity and priority
- Registration of the mortgage charge on title
- Advice on compliance with Ontario lending laws including criminal interest rate provisions
- Representation in default or enforcement proceedings if needed
Frequently Asked Questions
What protections do private lenders need?
Lenders should ensure the mortgage is properly registered on title as a first or second charge, that the property has sufficient equity (typically max 75-80% LTV), and that all documentation complies with Ontario law including criminal interest rate limits under the Criminal Code.
What should borrowers know before signing?
Borrowers should understand the interest rate and how it is calculated, repayment terms and amortization, any prepayment penalties or bonuses, and the consequences of default including the lender’s right to power of sale proceedings.
How is a private mortgage different from a bank mortgage?
Private mortgages typically have higher interest rates but offer faster approval, more flexible qualification criteria, and the ability to customize terms. They are ideal for borrowers with non-standard income situations or properties that need work.
Get a Free Legal Consultation
Contact Sarkaria Sethi LLP at 905-440-1220 or reach out online. We serve clients in English, Hindi, and Punjabi.
Legal Information, Not Legal Advice. This page provides general information about real estate legal services in Ontario. Every real estate transaction is unique, and you should consult with a qualified real estate lawyer about your specific situation before taking any action.