Private mortgage

A private mortgage is a loan secured by a registered charge on a property, where the money comes from a private individual, a private investment company, or a pool of private investors instead of a chartered bank, credit union, or other institutional lender. The borrower signs a mortgage agreement and the lender registers it against the title, so if the loan is not repaid the lender has the same basic security rights as any other mortgage holder.

Private mortgages are usually short term, commonly one to three years, and they tend to run on terms written around a specific purpose, such as bridging the gap until a sale closes or giving a buyer time to improve or refinance a property. Because the lender sets the terms directly, the rate, fees, and repayment schedule can differ a great deal from a bank product. That flexibility is the main reason people use them, and it is also why they are worth understanding before signing.

In Ontario, private lending sits outside the standard rules that bank mortgages follow, so the details of each loan depend heavily on the written agreement. Anyone looking at one should read the charge, the term, and what happens at renewal or maturity.

The term matters in the rent-to-own sector because some sellers and buyers use private mortgage financing to structure transactions that banks will not fund directly. For a directory listing, that is the context in which a private mortgage provider may appear. You can find firms that offer this kind of financing in our mortgage and credit support category.

Private mortgages are distinct from private loans that are unsecured, and from lease arrangements where the buyer never takes title. The security against the property is what makes the loan a mortgage.

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