If you’ve ever been turned away by a traditional bank, you’re not alone and you’re not out of options. Many Canadians, especially newcomers, self-employed individuals, or those with bruised credit, are turning to private mortgage lenders. But what do these lenders actually care about when reviewing your mortgage application? Let’s break it down in plain language.
It’s All About the Property
Unlike major banks that dig into every line of your income and credit report, private mortgage lenders focus primarily on the property itself. Why? Because that’s their security. If you default on your loan, the lender wants to know the property can be resold quickly and hold its value. So things like:
- Location (urban, desirable areas are preferred)
- Current market value (confirmed by an appraisal)
- Condition of the home
- How much equity is in it
Loan-to-Value Ratio (LTV)
Private lenders are laser-focused on what’s called the Loan-to-Value (LTV) ratio. This is how much you’re borrowing compared to what the property is worth. Most private lenders cap this around 75–85%, meaning you’ll need a larger down payment or more equity in the home to qualify. Even with a shaky credit score, if your LTV is strong, you’re in the game.
Income Still Matters (But Flexibly)
Private lenders do look at your ability to repay the loan, but they’re more flexible than banks. If you’re self-employed, working multiple jobs, or just starting over financially, they might accept alternative proof of income like bank statements, contracts, or rental income.
Exit Strategy Is Everything
This is a big one. Private mortgages are usually short-term (1–2 years), so lenders want to know: What’s your plan after this loan?
Are you working to rebuild your credit so you can move back to a traditional lender? Are you planning to sell or refinance? The clearer your plan, the more confident the lender will feel.
Ready for Apply Mortgages?
As someone who’s helped clients on both sides from working in traditional finance at TD to brokering private mortgage deals, I’ve seen firsthand that the best deals come from clarity, transparency, and strategic planning. Private lending isn’t a last resort, it’s a stepping stone when life doesn’t fit inside a bank’s checklist. If you’ve got equity, a plan, and a property that makes sense, we can help you get approved.
Contact Niche Mortgages today for no-pressure consultation.
