Ontario’s Financial Services Regulatory Authority (FSRA) is reporting a dramatic increase in the securing of private mortgages – a trend fueled by many unable to qualify for traditional loans due to high interest rates, inflation and a slowing economy.
Huston Loke, FSRA Vice-President of Market Conduct, notes the dollar value of private mortgages in Ontario increased a whopping 72 percent from 2019 to 2021 – from $13 billion to $22 billion. He says it’s critical that those looking at obtaining a private mortgage fully understand all aspects of that financing option and their ramifications.
Loke lists some key questions to ask and get to answers to when investigating the private mortgage option.
As for safeguards in terms of consumer protection, Loke says brokers and agents have an obligation to make sure mortgages are “suitable” for borrowers. Still, as the private mortgage option explodes in popularity, oversight is even more critical.
FSRA is launching a consumer education campaign titled Know What You’re Getting Into. More information can be found at www.fsrao.ca/privatemortgages.
(Written by: Paul Rellinger)
