How to Qualify for a Private Mortgage Lender in Toronto

Have you ever been told you don’t qualify for a mortgage – even though you have the down payment, the income, and the property picked out?

If you’re buying or refinancing in Toronto, you know how frequently this happens.

Banks follow rigid formulas. And if your income is self – employed, commission based, recently incorporated, or simply doesn’t fit their checklist, the answer is often no.

That’s where a private mortgage lender in Toronto comes in.

Private lenders don’t base decisions solely on income and credit scores. They focus on the property, the equity, and how the loan will be paid back.

So how do you qualify for a private mortgage lender in Toronto – and how do investors utilize private lending strategically?

Let’s take a look.

The Role of a Private Mortgage Lender in Toronto

Private mortgage lenders give loans to people outside of regular banks, which is helpful for those who don’t meet traditional lending rules. They can provide quick and flexible options for things like refinancing, short term bridge loans, or urgent property purchases.

Unlike banks, these lenders focus more on the value of the property than the borrower’s credit history, which makes approvals faster and terms easier to customize.

Although their interest rates are higher than regular mortgages, private lenders are a practical choice for anyone who needs fast access to money without waiting for a bank.

Did you know? The Canada Mortgage and Housing Corporation (CMHC) has repeatedly acknowledged that alternative and private lenders play a stabilizing role in housing finance by serving borrowers who fall outside traditional mortgage lending.

What Are the Requirements to Qualify for a Private Mortgage?

Here’s a myth we need to bust: a private mortgage lender doesn’t give loans to just anyone. They provide financing to people who meet certain risk criteria.

Here’s what they usually look for:

Equity Position

Equity in your property is an important factor for private lenders. The more ownership you already have, the less your personal credit history matters.

In Toronto, lenders usually look for:

65% – 75% Loan to Value (LTV) for residential properties
Lower LTV for construction or mixed use projects

2. Property Quality

Lenders pay close attention to the property itself – including its location, marketability, zoning, and condition.

Even within Toronto, different neighbourhoods or property types are evaluated differently, so every property is assessed on its own merits.

3. Exit Strategy

Every loan approval revolves around one question: “How will this loan be paid off?”

Whether it’s through refinancing, selling the property, or completing construction, lenders want a clear plan, not just hope or false promises.

4. Legalization & Transparency

Private lenders can work efficiently, but they never take risks blindly.

The property must have clear ownership, an accurate appraisal, and full disclosure – all of which are necessary for approval.

Your Guide to Getting Approved for Private Mortgage Lending

Getting a private mortgage isn’t only filling out an application. It’s about showing the lender that your deal makes sense and that lending to you is a good decision.

Here’s how to do it right:

Step 1: Know Your Numbers Inside Out

Make sure you clearly understand the purchase price, what the property will be worth after repairs, how much equity you have, your costs, and how long the project will take.

When you know your numbers well, you sound confident and prepared.

Step 2: Finalize the Deal Like a Pro

This is where experience counts.

Put together a clean, easy to read mortgage summary (clear overview of the deal) that shows:

Appraisal
Exit strategy
Use of funds
Risk mitigation

This is exactly where expert brokerage firms – like OMJ Mortgage – help you get a fully funded deal.

Step 3: Higher Interest Rates and Fees

Private loans close faster than bank loans and offer more flexibility, but that convenience usually costs more.

A private mortgage lender in Toronto charges higher interest rates and fees because they take on more risk. Knowing this upfront helps avoid surprises.

Step 4: Close Fast

Private mortgages can close in just a few days instead of months – but only if all your documents are ready upfront.

So, being prepared is what makes closings fast.

How to Improve Your Approval Odds

Bring more equity to the deal
Shorten the loan term
Show a clear and realistic exit plan
Work with brokers who understand private lending, not just bank loans

Risks and Downsides of Private Lending

Private loans are faster and more flexible than bank loans, but they usually cost more.
Interest rates are higher because lenders take on more risk.
Fees and closing costs are often higher than traditional loans.
Loan terms can be stricter if you run into delays or problems with the property.
Private loans aren’t as heavily controlled by the government, so you need to read contracts carefully to avoid surprises.

Finding Private Lending Opportunities in Toronto

Connecting with private lenders doesn’t come with a quick online search.

The best opportunities come through networks, including:

Mortgage brokers with private mortgage lender connections
Real estate lawyers
Investor groups
Firms specializing in alternative lending

Final Thoughts

Summing up, for investors in Toronto who understand the market and work with the right partners, a private mortgage lender in Toronto provides opportunities that traditional banks often can’t.

They offer quick approvals, flexible terms, and decisions based on the property’s value rather than just credit history.

Moreover, success in private lending depends on preparation, clarity, and guidance. That’s where OMJ Mortgage comes in.

So, reach out to them today and turn your property opportunities into fully funded deals.