Private Lending Growth: What Every Broker Should Know

Have you noticed how tough it’s become to get a mortgage from the big banks in Canada? 

I talk to homebuyers and investors all the time, and one thing I hear again and again is frustration. Traditional mortgage lenders are stricter than ever. Rates are higher, approvals are slower, and many Canadians are left without good options.

Not long ago, alternative lending was seen as a “last chance” option. Something borrowers turned to only when every bank said no. But things have changed. Private lending is no longer niche—it’s becoming mainstream.

In this blog, I’ll explain why private lending is on the rise, what it means for mortgage brokers, and what you need to keep in mind if you’re advising clients in this space.

Why Private Lending Is Growing in Canada?

Let’s be honest—getting approved by a traditional mortgage company isn’t easy anymore.

• Home prices are still high.
• Banks have become more conservative with lending.
• Stress test rules push many borrowers out of qualification.

Because of this, more and more Canadians are looking to alternative mortgage lenders.

The Canada Mortgage and Housing Corporation (CMHC) recently reported that private and alternative lending grew faster than overall mortgage credit in 2024. Assets managed by the top 25 mortgage investment corporations (MICs) jumped by over 7% in the last quarter alone.

This tells us one clear thing: private lending is not slowing down anytime soon.

Who’s Using Private Home Mortgage Lenders Now?

Here’s something I’ve seen first-hand: the type of clients turning to private lenders has completely changed.

People often assume that only borrowers with poor credit or missed payments use private loans. But that’s not true anymore.

Today, I see:

• Young families who just miss the bank requirements.
• Self-employed Canadians with non-traditional income.
• Investors are looking for investment mortgage lenders to expand their portfolio.
• Newcomers who don’t have a long credit history yet.

These are everyday Canadians. Many are financially stable but simply don’t fit the narrow rules of traditional home mortgage lenders.

Why Should Mortgage Brokers Pay Attention?

If you’re a mortgage broker, the rise of private lending is a huge opportunity.

But it’s also a responsibility. You can’t just place a client in any private mortgage and call it a day. You need to fully understand how these loans work—and how to guide your clients safely through them.

Yes, private loans usually have higher interest rates. But they can also provide short-term relief, a bridge solution, or a stepping stone into the real estate market.

The Dos and Don’ts of Private Mortgages

Here are some simple rules I always keep in mind:

Do: Treat Private Lending as a Temporary Solution

Explain clearly to clients that this isn’t forever. The goal should be to move back to a traditional mortgage loan when their situation improves.

Do: Educate Your Clients

Don’t assume they understand how private mortgages work. Walk them through fees, terms, and exit strategies.

Do: Offer Options

Never push just one solution. Show clients alternatives so they can make an informed choice.

Don’t: Leave Clients Without an Exit Plan

Placing a borrower in a private mortgage without a clear way out can hurt them financially for years.

Don’t: Rely Only on Your Course Certificate

Taking the private mortgage licensing course is great, but real expertise comes with practice, research, and client care.

The Role of Regulation

In Ontario, agents and brokers need to complete a second-level course before they can transact private mortgages. That’s a good start.

But regulation is tightening further. The Financial Services Regulatory Authority of Ontario (FSRA) has cracked down on brokers who don’t act in their clients’ best interests.

That means transparency matters more than ever. You need to be ready to show how you explained every option and why the chosen solution was right for your client.

Why Clients Value Honesty?

I’ve learned that clients appreciate honesty over sales talk.

When you tell someone upfront that a private mortgage is more expensive but temporary, they trust you more. When you explain that the plan is to build their credit or stabilize their income so they can switch to the best mortgage lenders later, they feel supported.

This builds long-term relationships. And as a broker, that trust is priceless.

How Private Lending Opens Doors?

Let’s imagine a young couple. They’re self-employed, and their income is solid but irregular. The bank says no.

A private mortgage allows them to buy their first home. They use the property for two years, build equity, and later refinance with a traditional lender.

Or take an investor who needs short-term funding to buy and renovate a property. Traditional banks won’t take the risk. But investment mortgage lenders will. This helps them grow their portfolio.

These are real-life examples of how private lending keeps Canadians moving forward.

What Does This Mean for Brokers?

If you’re a broker in today’s market, here’s what you should focus on:

• Learn the private space deeply, not just the basics.
• Build relationships with trusted private home mortgage lenders.
• Always design exit strategies for your clients.
• Educate clients with simple, clear language.

By doing this, you’ll not only serve your clients better but also grow your reputation as a trusted mortgage professional.

Final Thoughts

Private lending in Canada has changed. It’s no longer just for borrowers in financial trouble. It’s for families, newcomers, self-employed professionals, and investors who need flexible solutions.

For brokers, this is both an opportunity and a responsibility. Help your clients use private lending as a stepping stone—not a trap. Guide them with honesty, transparency, and a clear exit plan.

If you’re looking at business growth opportunities, explore business loans in Ontario. Private lending is not about last chances—it’s about opening doors. And as brokers, we’re the ones who hold the keys.