Loanova Plans Canada’s First “Fractional Mortgage” Platform, Targeting Underserved Borrowers

Toronto | 28-Nov-2025, 11:00 AM

A Toronto-based fintech startup, Loanova, has announced plans to launch what it calls Canada’s first fractional-mortgage platform, a model designed to let everyday investors purchase small stakes in syndicated mortgages traditionally dominated by institutions. The company says it aims to expand access to homeownership for borrowers who struggle to qualify under the big-bank system — including newcomers, self-employed workers, and Canadians with limited or thin credit histories.

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What Loanova Is Proposing

Under the proposed model, Loanova will pool mortgage loans and allow investors to buy fractional portions — sometimes as small as 1% or even less — in exchange for a slice of the interest payments. It parallels fractional real-estate investment in the property market, but applies the structure to mortgage financing instead of property ownership.

For borrowers, Loanova says the system broadens access by relying on a more holistic underwriting process. Instead of rigid credit-score-first banking models, the platform plans to evaluate borrowers using a mix of income stability, cash-flow patterns, rent-payment history, and real-time financial behaviour. That approach, the company believes, can accommodate:

• Newcomers to Canada who have strong international credit but no domestic history
• Self-employed or gig-economy workers with irregular but stable income
• Borrowers with thin files who have consistent rent or utility-payment history

Loanova argues that traditional lenders leave out thousands of creditworthy borrowers each year because the underwriting rules were built for a workforce model that no longer reflects modern Canada.

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Why It Matters for Borrowers

Canada’s mortgage-qualification system has tightened over the past decade, driven by the mortgage stress test, rising rates, and post-pandemic underwriting conservatism. Even borrowers with stable income have been finding it difficult to qualify for financing at major banks.

A 2025 CMHC note highlighted that approximately 18% of mortgage-seeking newcomers face rejection purely due to the absence of Canadian credit history. Meanwhile, self-employed Canadians now represent nearly 15% of the national workforce, according to Statistics Canada — yet they continue to face disproportionately higher rejection rates.

Loanova believes fractional mortgage funding can fill that gap by distributing risk among a wider base of investors while giving borrowers a new route into the housing market.

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Regulatory & Risk Questions

Despite the excitement, the model will face regulatory scrutiny. Fractional mortgage investment has to align with guidelines set by provincial securities regulators and mortgage-brokerage licensing bodies.

Key questions regulators will examine include:

• How are investor protections ensured?
• How transparent are borrower-risk disclosures?
• How does Loanova handle defaults, arrears, and loan-servicing obligations?
• Does the platform qualify as a security requiring prospectus-level reporting?

Industry analysts note that platforms in the U.S. and Europe with similar models have succeeded, but require robust governance and clear investor-risk warnings.

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Market Context

The announcement comes at a time when Canada’s mortgage landscape is shifting faster than at any point in the past decade:

• Household mortgage balances reached C$2 trillion+ in 2025.
• Non-bank lenders gained market share as traditional underwriting tightened.
• Alternative lending grew nearly 9% year-over-year, according to the Canadian Lenders Association.
• Housing affordability remains strained even as prices cool, particularly for new immigrants and self-employed families.

Platforms like Loanova position themselves at the intersection of these pressures — promising improved access without the capital-intensive infrastructure of a bank.

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What Happens Next

Loanova is currently preparing for regulatory review and a staged national rollout. The startup expects the product to open first to accredited investors, followed by retail access once approvals are in place.

If successful, fractional mortgages could create a parallel funding system that supports borrowers who fall outside traditional guidelines while giving investors a new yield-based asset class tied to Canadian housing credit.