Do Private Lenders need a brokerage license to lend in Ontario?

Do Private Lenders need a brokerage license to lend in Ontario? 

The Mortgage Brokerages, Lenders and Administrators Act, 2006 establishes that anyone acting as a mortgage lender in Ontario must possess a brokerage license to operate legally. According to this law, a person or entity is considered a mortgage lender if they lend money within Ontario on the security of real property, or if they publicly present themselves as providing such services.

However, this requirement has notable exemptions. For example, certain financial institutions—including banks, credit unions, and trust companies—are exempt from holding a brokerage license under specific conditions. Additional exemptions are specified in Ontario Regulation 407/07, which outlines that a person or entity is exempt from needing a brokerage license if they operate exclusively through a licensed mortgage brokerage or if they meet other criteria exempting them from the brokerage requirement. These rules ensure that licensed entities meet regulatory standards, while allowing qualified institutions certain legal leeway to conduct lending activities without the need for individual licensing.

Therefore a private lenders with a brokerage license or acting through one would entitle it to carry on the business of dealing in mortgages or the business of trading in mortgages or to carry on business as a mortgage lender in Ontario, as the case may be, by engaging in these activities permitted under the licence issued to the licensee.

However, this exemption does not apply to the administration of mortgages on-behalf of others, but obviously a private lender can administer and service its own mortgages.

Contact Jeff Levy at Levy Zavet, Lawyers for all your private lending, mortgage brokering and compliance matters.

Read More: Private Mortgage Administration & Servicing