5 Quick Tips to Protect Your Private Lending Deals

Marinella Nicolosi
Sep 16
2 min read

Canadian private lending investor reviewing mortgage contract

By Marinella Nicolosi, Private Lending Queen

Private lending can be one of the most reliable ways to earn passive income through real estate in Canada—but only if you protect your capital. Without safeguards, even the most promising deal can expose you to unnecessary risk. Here are five quick tips to protect your private lending deals so you can invest with confidence.

1. Secure Your Loan with Real Estate Collateral

Never lend money without proper security. Registering your loan on title as a mortgage ensures you have a legal claim on the property. In Canada, this step is critical—if the borrower defaults, your investment is backed by tangible real estate, not just a handshake.

2. Work with an Experienced Real Estate Lawyer

Private lending agreements must be drafted and reviewed by a qualified real estate lawyer. This protects you from loopholes, ensures your mortgage terms are enforceable, and keeps you compliant with Canadian laws. It’s a cost worth paying to prevent costly mistakes later.

3. Vet Borrowers with Thorough Due Diligence

Protecting your capital starts with knowing who you’re lending to. Ask for credit reports, income verification, and a detailed exit strategy. Strong borrowers with clear repayment plans reduce the chance of defaults and late payments.

4. Set Realistic Loan-to-Value Ratios (LTV)

The lower the loan-to-value, the safer your position. For example, lending up to 65% of a property’s value gives you more security than lending at 85%. By staying conservative, you protect yourself against market fluctuations and unforeseen challenges.

5. Maintain Clear Communication and Documentation

Every term—from interest rates to repayment dates—should be in writing. Maintain consistent communication with borrowers and keep a record of all interactions. Clear documentation is your best defence if disputes arise.

Private lending in Canada is a powerful way to generate steady returns without managing tenants or renovations. But protection comes first. By securing your loan with collateral, working with a lawyer, vetting borrowers, setting safe LTVs, and keeping communication clear, you safeguard both your money and your peace of mind.

Published: September 16, 2025 - 2 min read

By Private Lending Queen

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