What Are Alternative Private Mortgage Lenders?

August 17, 2021 | Posted by: Ron Chan

What Are Alternative Private Mortgage Lenders

A person wants to buy a home. A person goes to bank. A person gets a loan. That’s the process, right? Once upon a time it was, which is why some of the very same households from decades ago are still paying down a mortgage. Of course, many buyers have become more savvy over time, learning from their parents and grandparents mistakes. These buyers now understand the value of using a mortgage broker over approaching the big banks on their own. While the benefits are numerous, one you may have heard about is the provision of access to alternative lenders, those without TD, RBC, or BMO (etc.) chiseled on the stone of their institutions. But what are alternative lenders, you ask? 

In general, alternative (or “private”) lenders offer short- term, interest-only loans. The loans do not typically require buyers to pay the mortgage principal down, and instead only call for interest payments each month. These unconventional lenders consider more than your credit history, as they assess a given property’s overall value and marketability. It’s for this reason that buyers without well-established credit look to this option to at least get started on a mortgage. But who exactly is behind the veil of private mortgage loans? Let’s review.

Who Private Mortgage Lenders Are and How They Can Be the Key to Home Ownership in Winnipeg Manitoba

Individual Private Lenders

Sounds like a loan shark, doesn’t it? While we certainly discourage you from getting a home loan from the cousin of the guy you know at the gym, there are established individual lenders out there. But if there was ever a requirement to use a mortgage broker, this is it. Avoid going to friends, family, and that “guy” when it comes to individual private lenders. The scenario is ripe with potential complications. A trusted mortgage broker with longstanding ties to the Winnipeg business community will have access to reputable individual lenders. Call 204.290.9950 to inquire.

Syndicates

Admittedly, this sounds even scarier than a loan shark, but for the most part there is nothing to worry about when you go through a professional broker. A mortgage syndicate, or syndicated mortgage investment (SMI) group, is a collective of individual lenders (investors) who form a funded pool from which home loans are provided. Each loan is considered on a case by case basis. Call 204.290.9950 to find out if this option makes sense for you.

Mortgage Investment Corporation (MIC)

Similar to an SMI, an MIC also pools funds from a group of investors. However, an MIC is the largest type of private mortgage lender, with some Canadian MIC’s holding well over a half-billion CAD in mortgages this year. With significant interest income, MICs are able to make available a number of home loans at once, and they tend to have more established lending guidelines than the other two alternatives. Call 204.290.9950 to discuss this option.


The point of shedding light on the query of “what are alternative and private lenders” is to show first time buyers and investors that when they work with a mortgage broker, they have options. Never approach a big bank without first discussing these options. You may uncover rates and terms that will allow you to outright own a home faster than you could have ever imagined. Call 204.290.9950 to learn more.

Back to Main Blog Page