Private mortgage lending has moved from a niche into a mainstream alternative asset for investors who want yield backed by real property. As banks have tightened, well-structured private mortgages have filled the gap and created opportunities for lenders who understand them.
What is Private Mortgage Lending?
A private mortgage is a loan secured against real estate, funded by an individual or entity rather than a bank. The lender earns interest (and often lender fees) and holds registered security against the property. Returns come from the rate the borrower pays; safety comes from the equity beneath the loan.
Why borrowers use private capital
Speed, flexibility, and situations banks won’t touch quickly a bridge between purchases, an equity take-out for a renovation or tax bill, a self-employed borrower with strong assets but irregular income, or a project mid-stream. These are not necessarily weak borrowers; they are often strong ones with a timing or documentation mismatch.
What is the risk of Private Mortgage Lending?
The two measures that matter most are position (a first mortgage ranks ahead of a second on repayment) and loan-to-value (LTV) (how much is owed against the property’s value). A conservative first mortgage at a low LTV is a different risk than a second mortgage at a high one, even at a similar headline rate. Other factors marketability of the property, exit strategy, borrower strength, and clean title round out the picture.
The BC and Ontario context
Both provinces have active private lending markets and formal regulatory oversight. For lenders, that oversight is a feature: it brings licensing, disclosure, and trust-accounting standards to the parties who arrange and administer your loans.
For investors, the path to doing this well is unglamorous but reliable: define your criteria, see only deals that fit, underwrite each one on its own merits, and administer the loan properly once funded.
AAREA’s role in Private Mortgage Lending
We work with private lenders to source, structure, and administer mortgages that match each lender’s own criteria.
Whether you’re building a book or expanding one, the difference is in the deals you actually see. AAREA represents lenders only and presents opportunities matched to your criteria across BC and Ontario.