Search “private lenders bad credit Canada” and the results blur four very different things into one phrase. An individual lending their own money against your home can call themselves a private lender. So can a mortgage investment corporation pooling other people’s money, a licensed installment lender reached through a matching platform, and an unlicensed operator working from a spare bedroom. Only one of those four matches what most borrowers picture, and mixing them up is how people end up in a bad deal or an outright fraud.
This guide sorts the four categories apart and explains what actually makes a private lender legitimate in Canada. It also shows how to check a licence using each province’s own registry, and lays out what private lending typically costs against the country’s 35% criminal interest rate cap.
What “Private Lender” Actually Covers
“Private lender” is not a licensing category. It is a catch-all term for anyone lending outside the big banks, and it covers at least four distinct arrangements.
Individual private lenders are people lending their own capital, usually secured against real estate, for a return a savings account cannot match. They set their own lending criteria, rates and conditions rather than following a bank’s underwriting rules.
Mortgage investment corporations, or MICs, pool money from many investors under a structure defined in the Income Tax Act, then lend that pooled capital out as mortgages. A MIC is still a private lender. It is simply operating at a larger, more institutional scale than one person writing a cheque.
Licensed alternative consumer lenders are installment and personal loan companies holding the provincial registrations that apply to the credit products they sell. This is the category most matching platforms, including Lend For All, actually connect borrowers with, and it is not the same thing as an individual private mortgage lender.
Unlicensed operators are the fourth category, and the only one worth avoiding outright. They borrow the language of the first three (private investor, alternative lender, flexible terms) with none of the accountability behind it.
How to Check Whether a Private Lender in Canada Is Actually Licensed
If the money is being arranged against real estate, whether the source is an individual or a MIC, the deal almost always has to go through a business licensed to broker mortgages in your province. That licence is what you can verify, even when the individual lender behind the money is not personally required to hold one.
Each province keeps its own public registry:
- Ontario licenses mortgage brokerages, administrators, brokers and agents through the Financial Services Regulatory Authority of Ontario under the Mortgage Brokerages, Lenders and Administrators Act. Acting as a mortgage agent or broker without a licence is an offence under that Act, and the searchable list of licensees is public.
- British Columbia registers mortgage brokers and submortgage brokers with BCFSA under the Mortgage Brokers Act. Its public search shows registration status, licence conditions and any recent discipline before you sign anything.
- Alberta licenses mortgage associates and brokers through the Real Estate Council of Alberta, and its ProCheck tool confirms in seconds whether a person or brokerage currently holds a mortgage licence in the province.
- Quebec places mortgage brokering under the Autorité des marchés financiers, which maintains a public register of authorized firms and representatives.
Licensing for the second category, alternative consumer lenders, works differently. Provinces regulate high-cost credit and payday lending specifically rather than issuing one blanket licence covering every installment loan company, so the registry that applies depends on the exact product. When in doubt, your provincial consumer affairs office can confirm which registration, if any, applies to the loan in front of you.
For the broader signals that apply to any online lender, not only private ones, our checklist for spotting a legitimate lender goes deeper on site verification, disclosure requirements and privacy policies.
What Private Lending Actually Costs
Every private lender in Canada, individual, MIC, or licensed alternative company, operates under the same ceiling. As of January 2025, no lender can legally charge more than 35% APR on the total cost of borrowing, calculated across all fees and interest combined under Section 347 of the Criminal Code. Payday loans are the one product carved out of this cap under separate provincial legislation.
Where a private lender lands under that ceiling depends heavily on collateral. WOWA’s 2026 private mortgage guide, drawing on CMHC data, puts average private mortgage rates at roughly 6.5% to 15%, against 4% to 5.5% for bank mortgages. The average across Canada’s largest mortgage investment entities runs closer to 9% to 10%.
Lender, broker, legal and appraisal fees come on top of that rate. Unsecured products from licensed alternative consumer lenders tend to sit much closer to the 35% cap, since the lender is taking on more risk without an asset behind the loan.
What Security a Private Lender Wants
Individual private lenders and MICs almost always want the loan registered against real property, typically as a second mortgage or collateral charge behind an existing first mortgage. That collateral is the entire basis for lending to a borrower a bank has already declined.
Licensed alternative consumer lenders, the category most matching platforms work with, more often assess income and banking history instead of demanding an asset. That is a meaningfully different risk model, and it is one reason the two categories carry such different rates.
Warning Signs of an Unlicensed Operator
An advance-fee demand is the single clearest signal that a private lender is not legitimate. No licensed lender in Canada asks for a payment before releasing loan funds, no matter what the fee is called. The Canadian Anti-Fraud Centre tracks this pattern closely: a fraudulent loan site collects an application, approves it instantly, then requests a fee to “secure” or release funds that never arrive.
Other signs worth stopping for:
- No licence number the lender can produce when the loan is secured against real estate
- Guaranteed approval regardless of income, credit, or existing debt, often paired with no credit check language used as a substitute for any underwriting at all
- Pressure to sign or wire money the same day, with no written agreement provided first
- Contact information, a business address, or a bank account that traces outside Canada
Where Lend For All Fits
Lend For All is a loan matching platform, not a private lender. It connects borrowers with a network of licensed alternative consumer lenders rather than lending its own money or arranging financing secured against real estate the way an individual private lender or a MIC does.
Posted annual rates on Lend For All’s partner-lender listings have run from under 10% up to the 35% federal cap, depending on the lender and the loan. That places the network’s partners inside the licensed alternative consumer lender category described above, distinct from a private mortgage lender and distinct from an unlicensed operator advertising “private funds” with no registration behind it.
A private mortgage or a MIC can still be the better fit, usually because the amount needed is large and there is home equity to secure it against. That is a different conversation than the one a matching platform is built to have. For a personal loan or installment loan instead, comparing multiple licensed lenders through one application remains one of the more efficient ways to shop the alternative-lending market.
What This Means for You
The word “private” tells you almost nothing about safety on its own. Sorting a private lender into individual, MIC, licensed alternative company or unlicensed operator tells you almost everything. Each category carries a different licensing path, a different cost structure and a different set of things to verify.
Before signing anything, check the registry, confirm what security is being asked for, and treat any request for money up front as a stop sign rather than a formality. Credit unions and co-signed loans are worth comparing before committing to any private arrangement.
Ready to compare licensed lenders instead of chasing down a private one? Get matched with a Canadian lender today →
Frequently Asked Questions
A private lender is anyone lending money outside a bank or credit union, from an individual investor to a mortgage investment corporation to a licensed alternative consumer lender. The term describes the lender’s structure, not a specific licence, so the safety of the arrangement depends entirely on which of those categories it falls into.
Yes, though “private lender” covers four very different arrangements: an individual investor, a mortgage investment corporation, a licensed alternative consumer lender, or an unlicensed operator to avoid entirely. Real estate secured private loans usually run through a licensed mortgage broker, while personal loans typically come from licensed installment lenders instead.
For most borrowers, the realistic route is a licensed alternative consumer lender, not an individual private lender or a mortgage investment corporation, since those typically require real estate as security. Lend For All connects borrowers with licensed lenders through one application, comparing offers without applying separately to each one.
Search the mortgage broker registry in your province, since a legitimate real-estate-secured deal is almost always arranged through a licensed brokerage. BCFSA, RECA, and Ontario’s licensee list are public and free to search before you sign anything or send any money.
Private mortgages, secured against real estate, commonly run 6.5% to 15% in annual interest versus roughly 4% to 5.5% at banks, industry data shows, plus lender and broker fees on top. Banks price lower because they take less risk, lending only to borrowers who already meet stricter qualifying rules.
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