Private Mortgage Lender Disclosure Requirements in Ontario: What Borrowers Are Legally Owed

Private mortgages — loans from an individual, a syndicate, or a non-bank lender rather than a bank or credit union — fill a real gap for borrowers who don't fit conventional lending criteria. They also come with fewer of the built-in guardrails borrowers assume apply to any mortgage. Ontario law requires a level of disclosure before a private mortgage is signed, precisely because these deals can otherwise be harder for a borrower to evaluate.

Knowing generally what you're entitled to be told — and by whom — before you commit to a private mortgage helps you spot a deal that's missing something it shouldn't be.

Why Private Mortgages Are Treated Differently

Institutional lenders (banks, credit unions, and other regulated financial institutions) operate under standardized underwriting, disclosure, and consumer-protection practices that are largely uniform across the industry. Private lending is more varied: terms, costs, and the relationships between the parties can differ significantly from one deal to the next, and the borrower is often less experienced at evaluating what's being offered. Ontario addresses that imbalance by requiring meaningful disclosure before a borrower is bound, particularly where a mortgage brokerage is arranging the loan.

What Disclosure Is Generally Meant to Cover

Where a licensed mortgage brokerage or agent arranges a private mortgage, a borrower is generally entitled to receive clear, written information — before signing — covering matters such as:

• [ ] The total cost of borrowing, including the interest rate and how it's calculated
• [ ] All fees and charges connected to the mortgage, and who is responsible for paying them
• [ ] Who the brokerage or agent is being paid by (the borrower, the lender, or both)
• [ ] Any actual or potential conflict of interest the brokerage, agent, or lender has in the transaction
• [ ] The material terms of the mortgage itself — amount, term, and repayment structure

Exact disclosure formats, timing requirements, and thresholds are set by provincial regulation and can change; a mortgage broker or lawyer can confirm the current requirements that apply to your specific transaction rather than relying on a general description.

Conflicts of Interest You're Entitled to Know About

Private mortgage deals sometimes involve overlapping relationships that wouldn't typically arise with a bank — for example, a brokerage or agent that has a financial interest in the lending entity, or one person effectively representing both the borrower's and the lender's interests in arranging the same deal. Where a conflict like this exists, it's generally something the borrower is meant to be told about clearly before agreeing to the mortgage, not something left to be discovered later in the file.

Independent Legal Advice: Why It's Often Recommended

Because private mortgage terms can differ meaningfully from an institutional mortgage — shorter terms, different cost structures, and sometimes more aggressive remedies if a payment is missed — borrowers are often encouraged, and in some transactions required by the lender, to obtain independent legal advice before signing. Independent legal advice means a lawyer who represents only the borrower's interests reviews the mortgage terms with the borrower, separately from any lawyer acting for the lender. This step exists specifically so a borrower doesn't sign a private mortgage without understanding what they've agreed to.

Institutional vs. Private Mortgage Disclosure — General Comparison

Red Flags to Watch For

• Being asked to sign mortgage documents before receiving the required disclosure information in writing
• Vague or missing information about who the brokerage or agent is actually being paid by
• Pressure to sign quickly without time to review the terms or seek independent legal advice
• An unclear or undisclosed relationship between the person arranging your mortgage and the lender itself

None of these automatically means something improper is happening, but each is a reason to slow down and ask direct questions — or have a lawyer review the file — before signing.

Frequently asked questions