Private lenders — mortgage investment corporations, syndicated arrangements, and individual lenders — care less about a borrower's credit score than about equity, exit strategy, and how marketable the property is. Loan-to-value on private first mortgages commonly runs in the 50% to 85% range, and first mortgages make up the large majority of private-lender business, with second mortgages, bridge financing, and debt consolidation filling out the rest.
But private lending is also the segment where Canadian regulators have found the most documentation gaps. In Ontario, FSRA reviewed 101 private mortgage transactions and found that about 65% had missing, incomplete, or inconsistent documentation of the suitability assessment, and roughly a third had unclear disclosure of the mortgage's terms and conditions. This checklist is built to close exactly those gaps.
Does a broker need a different licence to place a private mortgage?
In Ontario, yes. Arranging a private mortgage — with a mortgage investment corporation, syndicate, private individual, or other non-institutional lender — requires a Mortgage Agent Level 2 licence, on top of Level 1 requirements, effective for licences issued under FSRA's framework since April 1, 2023. A Level 1 licence alone restricts an agent to financial institutions and CMHC-approved lenders. Confirm the equivalent private-mortgage authorization required in your own province before placing a file with a private lender.
Private lenders themselves generally don't need to be licensed, but they still have to work through a licensed mortgage broker or agent — which puts the suitability and disclosure obligations squarely on the broker's side of the transaction.
What does a proper suitability assessment for a private mortgage actually look like?
FSRA has been explicit that many brokerages fail here: nearly two-thirds of the private mortgage files it reviewed had missing, incomplete, or inconsistent documentation of why the private mortgage was suitable for that specific borrower. “See commitment” is not a suitability assessment — the file needs its own written rationale.
A defensible suitability record covers why an A or B lender wasn't a fit, why the specific private-lender terms serve the borrower's actual goal, and what the borrower's realistic exit plan is. Document it as its own artifact in the file, not folded into the commitment or left implied.
What disclosure does a private-mortgage file need to survive review?
Ontario's regulation requires clear written disclosure of cost of borrowing and the brokerage's role, and FSRA has flagged that vague references — pointing a borrower to “see commitment” or standard charge terms that were never actually provided — don't satisfy that requirement. If the required information isn't written directly into the disclosure document, provide a copy of the document that contains it and identify exactly where.
Conflicts of interest need early, explicit disclosure. Where the brokerage or a related party has any relationship to the lender — including a related mortgage investment entity — that conflict has to be disclosed clearly and at the earliest opportunity, not after the borrower has emotionally committed to the deal.
When does a private-mortgage borrower need independent legal advice?
Advising the client on the need for independent legal advice from a lawyer who doesn't act for the lender isn't optional on most private files, particularly where the borrower isn't receiving a direct benefit from the mortgage proceeds. A file shouldn't proceed to closing without a certificate of independent legal advice on record.
The requirement and its documentation vary somewhat by province, but the underlying principle — a borrower entering a higher-cost, shorter-term mortgage should have their own legal counsel confirm they understand it — is consistent across the private-lending market.
What actually belongs in a private-lender submission package?
- 01Written suitability assessment naming why a private lender fits this specific borrower and situation.
- 02Full disclosure statement, including cost of borrowing, written directly into the document or with an exact pointer to where it appears.
- 03Conflict-of-interest disclosure, if the brokerage has any relationship to the lender.
- 04Property appraisal or valuation supporting the loan-to-value the lender is being asked to fund.
- 05Clear statement of mortgage position — first, second, or further — and how that affects pricing and risk.
- 06Exit strategy: how and when the borrower expects to refinance, sell, or otherwise repay.
- 07Certificate of independent legal advice on file before closing.
For the broader step-by-step from commitment to funding, see the Condition-Clearing Playbook, which applies just as much to a private file as any other.
What fees should a broker expect on a private file, and where does support help most?
Private mortgage rates commonly run well above bank and B-lender pricing, and fee structures vary by lender — a lender fee, a broker fee, legal and appraisal costs, and sometimes a setup or administration fee all stack together. Compare the all-in cost of borrowing, not just the headline rate, and put the full breakdown in writing for the client rather than quoting a rate alone. Fee ranges vary meaningfully by lender and file; confirm current pricing per deal rather than relying on a rule of thumb.
Because private files carry the heaviest documentation and disclosure burden of any lender tier, this is where Treadstone's fulfillment associates add the most protection — building the suitability record, the disclosure package, and the ILA tracking into the file from the start rather than reconstructing it under review pressure later.