Private Mortgage Lenders in Canada: What Multifamily Investors Must Know

In a real estate market shaped by tightening credit conditions, elevated interest rates, and rising construction costs, more multifamily investors are turning to private mortgage lenders in Canada. These lenders offer flexible solutions, quick closings, and an asset-based underwriting approach that traditional banks often avoid.

Whether you’re acquiring a 10-unit building, repositioning a value-add asset, or need short-term financing to close a time-sensitive deal, private lenders are an increasingly important part of the real estate capital stack. This guide covers when and how to use private mortgage lenders, and how to evaluate your project’s financial feasibility using professional tools.

🔍 Summary: Private Mortgage Lenders in Canada

In this article, you’ll learn how private mortgage lenders in Canada help multifamily real estate investors secure fast and flexible financing in today’s restrictive lending environment. We explore when and why to use private lenders, how to compare their terms, what documents are required, and how to model your financing scenario using real examples and calculator tools. Whether you’re acquiring, repositioning, or refinancing, this guide equips you with everything you need to evaluate private mortgage options in 2025.

📌 Why Private Mortgage Lending Is Growing?

As traditional banks adopt more conservative lending practices, especially under OSFI’s tightening guidelines, private lenders are stepping in to support real estate investors with less conventional borrower profiles or project types. Banks are less likely to fund:

• Properties under renovation
• Investments with low or unstable income
• High LTV deals for newer investors
• Borrowers with insufficient income or irregular credit history

In contrast, private mortgage companies are guided by the asset itself and exit potential. They’re an essential solution for:

• Bridge loans
• Construction-to-perm funding
• Land acquisitions
• Equity take-outs
• Second-position financing

📚 Compare CMHC vs Bridge Loans

🧠 Key Advantages of Private Lenders

📌 Private lenders can also help investors working through alternative mortgage lending paths when banks reject their deals.

🏘️ When Should You Use a Private Mortgage Lender?

Use cases for private lenders for mortgage loans include:

• Time-sensitive multifamily or mixed-use acquisitions
• Repositioning underperforming rental assets
• Land purchases without building permits
• Interim financing before a CMHC-insured takeout
• Financing in corporate ownership or trust structures

Private lenders are especially helpful for real estate entrepreneurs working through mortgage brokers in St. Albert, Ontario, or B.C., where traditional lenders may be slow.

🔍 Explore our Valuation Toolkit to simulate returns with various rates.

🧾 Required Documents for Private Mortgage Lenders in Canada

Despite their flexibility, private lenders still require certain due diligence:

• Agreement of purchase and sale
• Appraisal or CMA (Comparative Market Analysis)
• Rent roll and operating budget
• Borrower ID and corporate structure
• Renovation plans or business case
• Documents for mortgage loan compliance

📂 Interested in streamlining your paperwork? Use our Capital Raising Guide to prepare investor-ready packages.

🧮 Sample Case Study – St. Albert

• Property: 12-unit walk-up in St. Albert
• Purchase Price: $2.2M
• Private Loan: $1.54M (70% LTV)
• Interest Rate: 9.5% interest-only
• Loan Term: 12 months
• Exit Strategy: CMHC refinance with 35-year amortization

📍 Explore our multifamily strategy in St. Albert

📊 How to Compare Private Lenders in Canada

Instead of listing “top lenders,” here’s how to evaluate the best fit for your needs:

1. Check Their Lending Focus

• Some lenders specialize in private mortgage company operations for residential multifamily only
• Others (like MICs) fund commercial, land, or high-LTV loans

2. Compare Interest Rates & Terms

• Ask: What is a private lender interest rate for a similar deal?
• Check: 8%–12% range for first mortgages; up to 16% for second position

3. Evaluate Speed of Execution

• Do they close in under 10 business days?
• Are they familiar with your province (e.g., Ontario, Alberta)?

4. Understand Fees & Penalties

• Ask about legal costs, appraisal requirements, and mortgage discharge processes
• Clarify prepayment rules in writing

5. Ask About Past Experience

• Have they worked on similar unit sizes, regions, or strategies (like collateral mortgage loans)?

🧮 Calculate Your Deal – Spring Loan Calculator

Use the Spring Financial Loan Calculator to:

• Compare monthly payments at different rates
• Model 6–12 month private bridge loans
• Adjust LTV and equity contribution levels

💡 Tip: Run simulations on “what is a private mortgage” vs CMHC-insured loans.

🔗 External Resources

• CMHC: Alternative Lending in Canada
• Mortgage Professionals Canada
• OSFI Guidelines
• First National Canada – Mortgage Rates

❓ FAQs – Private Mortgage Lending in Canada

Are private lenders legal in Canada?
Yes. Private lenders operate under provincial rules and may work through mortgage brokers or MICs.

What is a private mortgage?
A private mortgage is a real estate loan made by a non-bank individual or company, often for short-term or asset-based deals.

What is a collateral mortgage?
It’s a type of loan secured by more than the amount borrowed, giving the lender more flexibility in future advances or enforcement.

What is a private lender interest rate in 2025?
First-position rates typically range from 8%–12%, depending on risk, region, and leverage. Second mortgages may range from 12%–16%.

Can I refinance a private mortgage with CMHC?
Yes. CMHC takeout is the most common exit strategy after renovation or stabilization.

📞 Book a call with Smart Capital to get matched with a vetted private lender.