What if I have a private lender?
What if you have a private lender? Could that wreck your sale — or speed it up?
Quick answer that saves you time and money
If you have a private lender, you can still sell your Georgetown home. But you must handle payoffs, lien clearances, and paperwork with precision. Do it wrong and closing stalls or proceeds shrink. Do it right and you keep control, sell fast, and protect your profit.
Why this matters in Georgetown, ON
Georgetown sits inside Halton Hills, part of the Greater Toronto Area commuter ring. Buyers here are time-sensitive: they want move-in-ready homes and clear titles. Title issues scare buyers and slow closings. Private mortgages and other liens are registered on the property title and must be dealt with before transfer. In a market where multiple offers and tight timelines are common, any unresolved private lender issue will cost you leverage and money.
The simple playbook — do these five things now
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Get the exact payoff statement. Ask your private lender for a written payoff figure with an expiry date. This number includes principal, accrued interest, and any fees. Don’t rely on verbal totals.
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Order a title search. Your lawyer or title company will pull the title and show every registered charge: first mortgage, second mortgage, judgments, or liens. Confirm the private mortgage is listed and note its priority.
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Talk to your solicitor early. A real estate lawyer in Ontario will prepare the discharge of mortgage and make sure the private lender is paid at closing. They’ll also confirm if the lender needs a specific discharge form or direction letter.
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Build the payoff into your sale price and net proceeds. Know how much you’ll clear after paying the private lender, realtor fees, legal fees, and closing adjustments. If the private mortgage has prepayment penalties, factor them in.
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Communicate with your buyer and agent. Full transparency about liens speeds trust and closing. If the private lender requires extra time to process a discharge, adjust closing dates or negotiate ways to handle it at closing using trust funds.
Private lenders behave differently — know the types
- Hard-money/short-term lenders: Often higher interest and stricter payoff rules. They can demand full payment on sale. Expect quick action and less leniency on timing.
- Private individuals (family/friends): More flexible but still should provide a written payoff. Emotional loans still need paperwork to clear title.
- Vendor take-back or second mortgages: These stay on title unless repaid or subordinated. If you’re using owner financing as part of the sale, you’ll need clear agreement terms.
Common roadblocks and how to beat them
- No payoff statement or slow response: Insist on a written payoff with a deadline. If they stall, your lawyer can send formal demand or arrange a bridging plan.
- Prepayment penalties: Ask for written proof of any penalty. Negotiate removal, or calculate the penalty into your net and decide if selling still makes sense.
- Lender refuses to discharge until full funds received: Use an arrangement where the closing lawyer holds funds in trust and pays the lender at closing. This is standard in Ontario.
- Multiple charges and priority conflicts: Your lawyer orders a priority search and resolves who gets paid first. Don’t assume junior liens vanish — they must be cleared or managed.
Legal and registration details specific to Ontario and Georgetown
- Registration on title: Mortgages and liens are registered on the Ontario land registry system (Teranet). A registered charge must be cleared or subordinated for a clean transfer.
- Power of sale and remedies: In Ontario, lenders have remedies if a borrower defaults. If you’re close to a sale, avoid default triggers that give lenders the right to enforce before closing.
- Lawyer’s role at closing: Only a licensed Ontario solicitor can register a discharge of mortgage and complete the land transfer. They coordinate payoff demands and ensure the title is transferred free of encumbrances unless otherwise agreed.
Pricing and negotiation tips for sellers with private lenders
- Price with your payoff in mind. Know your bottom line before fielding offers.
- Use conditional offers wisely. A buyer who agrees to a slightly later closing date can be valuable if your private lender needs time to produce discharge paperwork.
- Consider paying out the private lender before listing if the interest and penalties justify it. Removing the lien before the market exposes you to fewer buyer objections and faster closings.
Fast sale strategies when a private lender is involved
- Cash or investor buyers: They move fast and accept title complications if resolved at closing. Work with a real estate professional who has investor contacts in Georgetown.
- Short closing with escrow arrangement: Your lawyer holds sale proceeds in trust and pays the lender at closing. This closes timing gaps.
- Sell “as-is” but disclose liens: This narrows buyer pool but can speed sale if price is right.
Mistakes that cost sellers the most (and how to avoid them)
- Waiting until an offer to check title: Order a title search immediately.
- Trusting verbal payoffs: Always get written payoff figures.
- Not accounting for legal fees and discharge costs: Include a buffer in your net proceeds.
- Hiding the private mortgage from buyers: Full disclosure prevents legal headaches and loss of trust.
How your realtor and lawyer should work together
Your realtor must coordinate the sale timeline with your lawyer and the private lender. Ask your realtor to: request a payoff, explain closing dates to buyers, and pre-screen potential buyers for speed and financial capacity. Your lawyer must: confirm title status, prepare a discharge, and handle trust funds at closing. Together they protect your proceeds and close on time.
Why using a local Georgetown agent matters
A local agent knows the buyers and investors in Georgetown and Halton Hills. They understand local closing timelines, typical buyer concerns, and common private lending practices in the area. That local knowledge turns potential delays into predictable steps.
If you’re selling in Georgetown and you have a private lender, you don’t need to panic. You need a plan, a payoff, and a team that moves fast.
If you want a no-nonsense review of your payoff and sale plan, contact Tony Sousa. He’s a Georgetown realtor who answers quickly, coordinates with lawyers, and knows local buyers.
Tony Sousa — Local Realtor
Email: tony@sousasells.ca
Phone: 416-477-2620
Website: https://www.sousasells.ca
FAQ — quick, accurate answers for Georgetown sellers
Q: Will a private mortgage stop me from selling my house?
A: No. But the private mortgage is a registered charge on title and must be paid or discharged at closing unless the buyer agrees to take the property with the mortgage attached.
Q: How do I get a payoff figure from a private lender?
A: Request a written payoff statement with a specific expiry date. If the lender is slow, have your lawyer send a formal demand.
Q: Can a private lender block my sale?
A: Only if the lender enforces remedies (like power of sale) due to default or obtains a court order. Communicate and arrange a payoff to avoid enforcement before closing.
Q: What if the private lender demands full payment before closing?
A: Your lawyer can hold sale proceeds in trust and pay the lender at closing, or arrange a certified cheque. Don’t wire funds without lawyer oversight.
Q: Are there prepayment penalties in private mortgages?
A: Sometimes. Review your mortgage documents. If penalties exist, negotiate or include them in your net proceeds calculation.
Q: Who pays to discharge the mortgage?
A: Typically the seller pays to clear their mortgage at closing. Legal fees and registration fees should be accounted for in your net proceeds.
Q: Do I need a lawyer in Georgetown to handle this?
A: Yes. Only a licensed Ontario real estate lawyer can register the discharge and complete the transfer. Use a lawyer who handles closings in Halton Region.
Q: Can I sell the house “as-is” with a private mortgage in place?
A: Yes, if the buyer accepts the condition. Most buyers want a clean title. If you sell as-is, price accordingly and disclose the lien.
Q: How long does it take to clear a private mortgage at closing?
A: Often same-day with lawyer coordination. Allow for timelines: request payoff early and schedule any necessary sign-offs.
Q: Should I pay off the private lender before listing?
A: If the cost of payoff plus lost interest is less than the benefit of a cleaner, faster sale, then yes. Run the numbers.
Want help evaluating your private lender payoff and selling plan? Contact Tony Sousa for a clear, local strategy that protects your proceeds and closes on time.
Email: tony@sousasells.ca | Phone: 416-477-2620 | https://www.sousasells.ca
