Lending in Canada as a US Private Lender: Provincial Licensing, the Interest Act and Canadian Mortgage Conventions

The short answer

Canada regulates mortgage lending province by province, and several provinces license lenders as well as brokers. On top of provincial rules, federal law adds the Interest Act disclosure rules, the section 347 criminal rate and FINTRAC anti-money-laundering duties. US lenders who adapt their documents to Canadian conventions before the first deal avoid most problems.

Provinces license the business, not just the broker

Ontario. The Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29 (MBLAA) regulates dealing and trading in mortgages, administering mortgages, and carrying on the business of lending money on the security of real property. A lender that carries on that business in Ontario generally needs a brokerage license from the Financial Services Regulatory Authority of Ontario (FSRA), unless an exemption applies. A lender that works through a licensed Ontario brokerage and administrator should still obtain advice on whether its own activity requires a license.

British Columbia. BC is changing regimes. The Mortgage Services Act comes into force on 13 October 2026 and replaces the Mortgage Brokers Act (BCFSA). The new Act creates license categories for mortgage brokerages, brokers, administrators and lenders. The mortgage lender category is being implemented in a later phase, which MLT Aikins notes creates a verification gap for licensees who must deal only with licensed or authorized lenders. See Blog 1.

Alberta. Mortgage brokerage is regulated under the Real Estate Act, R.S.A. 2000, c. R-5, by the Real Estate Council of Alberta. Whether a lender's own activity requires a license depends on the facts and any exemption.

Quebec. Mortgage brokerage has been supervised by the Autorité des marchés financiers since 2020. Quebec is a civil law jurisdiction: the security is a hypothec under the Civil Code of Québec, not a mortgage, and enforcement follows the Code's hypothecary recourses (Article 5). Under the Charter of the French Language, contracts of adhesion must be presented in French first; confirm the language requirements for your documents.

Extra-provincial registration. A US corporation carrying on business in a province usually must register there, for example under Ontario's Extra-Provincial Corporations Act, R.S.O. 1990, c. E.27, or BC's Business Corporations Act. Registration is separate from mortgage licensing.

Federal rules that apply everywhere

The Interest Act. Four sections reshape US-style documents:

• Section 4: state an annual rate whenever interest is quoted for a period shorter than a year, or recovery is limited to 5% per year.
• Sections 6 and 7: a blended-payment mortgage on real property must include a statement of principal and of the interest rate calculated yearly or half-yearly, not in advance. Without it, no interest is recoverable. This is why Canadian fixed-rate mortgages traditionally compound semi-annually, not in advance.
• Section 8: no increased rate, fine or penalty on arrears. The Supreme Court applied this strictly in Krayzel Corp. v. Equitable Trust Co., 2016 SCC 18.
• Section 10: an individual borrower on a mortgage with a term over five years may prepay after five years with three months' interest.

Criminal Code section 347. The criminal rate is 35% APR, with commercial exemptions for loans to non-individuals (48% APR up to $500,000; no cap above). See Article 1.

Anti-money laundering. Since October 2024, mortgage lenders, brokers and administrators are FINTRAC reporting entities under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Penalties increased sharply in March 2026. See Article 7 and Blog 4.

Foreign banks. US banks and their affiliates face the foreign bank restrictions in Part XII of the Bank Act, S.C. 1991, c. 46. Non-bank private lenders are generally outside those rules, but a lender affiliated with a US bank should check.

Currency and judgments

Canadian loan documents may be denominated in US dollars. If you sue, the court may convert the judgment to Canadian dollars; in Ontario, section 121 of the Courts of Justice Act, R.S.O. 1990, c. C.43, generally converts at the rate on the day before payment. Include a currency indemnity clause to cover any shortfall.

Taking title after default

The Prohibition on the Purchase of Residential Property by Non-Canadians Act, S.C. 2022, c. 10, s. 235, restricts non-Canadians and non-Canadian-controlled entities from acquiring certain residential property until at least 1 January 2027. A US lender that plans to take title through foreclosure or a transfer in lieu should confirm whether the prohibition or an exception applies. A power of sale to a third-party buyer, common in Ontario, avoids the lender taking title at all. See Blog 6.

Five document changes US lenders should make

• Replace default-rate step-ups with a single rate (Interest Act s. 8)
• Add annual-rate and blended-payment statements (ss. 4, 6)
• Recalculate APR including all fees (Criminal Code s. 347)
• Use a Canadian-form charge or hypothec registered by local counsel
• Add FINTRAC-compliant identification and a currency indemnity

Frequently asked questions

This content is general information for industry professionals and is not legal, tax or financial advice. Laws change and apply differently to each transaction; obtain advice from qualified counsel in each relevant jurisdiction. Legal counsel to the Cross-Border Private Lenders Association: Jasmine Daya & Co. Questions: info@cbpla.com