A common misconception is that private mortgage lending is only for “desperate” or high-risk borrowers. In reality, the private lending market in Canada serves a diverse and legitimate set of clients, many of whom are financially stable but fall outside the rigid underwriting guidelines of traditional financial institutions (often called A-lenders).
Private lenders assess risk differently from banks. Their focus is typically on asset value, equity position and a clear exit strategy rather than on income verification, credit scores or adherence to strict regulatory constraints.
The following is a breakdown of the most common borrower profiles encountered in private lending, along with relevant subtypes and real-world scenarios.