How does a private mortgage work in Canada?
What actually happens to your file after you call, from the first question to the day the money lands.
By Asim Ali, Mortgage Broker6 min read · Updated 5 November 2026
Licensed: BCFSA (BC) · RECA (Alberta) · FSRA (Ontario) · check our licences
A private mortgage is a short loan on your home from a MIC, a private fund or an individual investor. The lender looks at your equity, the property and your way out, not mainly your income or credit. In November 2026 a private first costs 7.49% to 10.99%, interest-only, for 6 to 12 months, plus fees. Most files go from first call to funding in 5 to 12 days.
What happens after you call a private mortgage broker?
We ask three questions, find a lender, and get you a written offer in 1-2 business days. The money usually lands 5-12 days after that first call. Here's the path your file takes on my desk.
The first call
What's the home worth? What do you owe? What's the deadline? No credit check yet.
The exit question
How will this loan be paid off in 6-12 months? If there's no answer, we stop here.
Commitment
I send your file to lenders that fit. You get rate, term, fees and the lender's name in writing.
Appraisal and lawyers
The home is appraised. You get the APR disclosure at least two business days before you sign with your own lawyer.
Funding
Money moves lawyer to lawyer. Old debts get paid. The rest comes to you.
Where does private mortgage money actually come from?
It comes from three places: mortgage investment corporations (MICs), private lending companies, and individual investors. Most only take files from licensed brokers.
MICs
A MIC pools many investors' money and lends it as mortgages. Three Point Capital in Kelowna and BFT in Hamilton are MICs.
Private lending companies
These lend their own or a fund's money. VWR Capital in Langley and CMI in Mississauga work only through brokers.
Individual investors
People with savings who fund one mortgage at a time, through a broker. They often fill gaps the funds won't.
Why it matters to you
Each source has its own appetite. One won't touch rural land. Another likes small seconds. Matching your file is most of my job.
I've written more about the kinds of private lenders on my main site. See the lender list for BC, Alberta and Ontario.
How does a private lender decide yes or no?
A private lender decides on your equity, the property and your exit. Income and credit come a distant fourth. That's the whole difference from a bank.
- Equity. What's left after every mortgage on title. More equity means a lower rate.
- The property. A city house is easy. A rural acreage, or a strata with a special levy, costs more. The lender asks, "Could I sell this fast?"
- The exit. A B-lender refinance, a sale, or a construction loan converting. Lenders want it named.
They'll still pull your credit. But a low score rarely kills a deal. A bad exit does.
How much can you borrow on a private mortgage?
Most private lenders go up to 75% of your home's value on a first. A first and second together top out near 80% in big cities. The rate climbs as you near that line.
Illustrative example. A Surrey home appraises at $770,000. The owner needs a $500,000 first to pay out a bank that won't renew.
- Loan-to-value: $500,000 ÷ $770,000 = 65%.
- The most a lender would go, at 75%: $577,500.
- At 65%, the BC rate band in November 2026 is about 8.49-9.49%.
If the appraisal came in at $700,000, the same loan would be 71%. The rate would rise, or the loan would shrink.
What will a private mortgage cost you, and who gets each fee?
You pay interest-only each month, plus four up-front costs. Two come out of the loan at funding. Here's the same illustrative $500,000 first at 8.49% for 12 months.
| Cost | Amount | Who gets it | When you pay |
|---|---|---|---|
| Interest, 12 months | $42,450 | The lender | $3,537.50 a month |
| Lender fee, 1% | $5,000 | The lender | Off the advance at funding |
| Broker fee, 1% | $5,000 | Our brokerage | At funding, disclosed in writing first |
| Legal | $2,000 | Both lawyers | At funding |
| Appraisal | $600 | The appraiser | Before funding |
| Total cost | $55,050 | APR 11.01% | |
Illustrative example, not a quote. APR = total cost ÷ amount borrowed ÷ term in years. See rates and fees for the calculator.
Why interest-only? It keeps the payment low while you fix the problem. The catch: your balance doesn't drop.
Never pay a fee up front. The only thing you pay before funding is the appraiser. A cash "commitment fee" before the lawyers are involved is a red flag.
How does the money move on closing day?
The money doesn't reach you until every debt on the closing statement is paid. It moves from the lender, through the lawyers, to whoever you owe.
- Documents. ID, mortgage statement, property tax notice, payout letters and proof of your exit.
- Two lawyers. The lender's lawyer prepares the mortgage. Your own lawyer explains it and witnesses your signature.
- Registration. The mortgage goes on title at your province's land registry.
- Payouts. The old mortgage, arrears, CRA or tax debts get paid straight from trust.
- The balance goes to you, with a statement showing every dollar.
What happens when the private mortgage term ends?
The full balance is due. You pay it off with a refinance or a sale, or ask the lender to renew. Renewal is a privilege, not a right.
Many terms are open after three months, so you can leave early without penalty. We write the exit plan before you sign and check in at month nine. A renewal fee is usually 0.5-2%. The exit strategy guide walks through the year.
Do private mortgages work differently in BC, Alberta and Ontario?
The basics are the same. Who regulates the broker, and what happens if you default, are not. Ontario moves fastest.
| BC | Alberta | Ontario | |
|---|---|---|---|
| Broker regulator | BCFSA | RECA | FSRA (Level 2 only) |
| If you default | Court foreclosure | Court foreclosure | Power of sale, no court |
| First deadline | 21 days to respond | 20 days to answer the Statement of Claim | Notice after 15 days in default |
| Time to pay out | Usually 6 months | Usually 3-6 months | 35 days from notice |
General timelines. Courts can change them. Ask a lawyer about your own file.
Check your broker's licence on the BCFSA, RECA or FSRA site. For BC detail, see private lenders in BC.
What else do people ask about how private mortgages work?
Can I go straight to a private lender without a broker?
A few lenders take direct applications, but most MICs and funds only take files from licensed brokers. A broker compares lenders and must show every fee in writing.
How fast can a private mortgage close?
A written commitment takes 1-2 business days. Funding usually takes 5-12 days. The appraisal and the two-day disclosure period set the pace.
Do private lenders need proof of income?
Not the way a bank does. They want to see you can carry the payment and how you'll pay the loan off. Bank statements often do the job.
What happens if I miss a payment on a private mortgage?
Call your broker that day. Default interest and legal costs add up fast. In Ontario a Notice of Sale can follow 15 days in default.
That's the whole machine, start to finish. If you've got equity and a deadline, call me at (604) 591-3590 or check your options. I'll tell you straight if a cheaper lender can do it first. — Asim Ali, Mortgage Broker
Sources. FSRA private mortgage guidance · BCFSA and RECA licensee search · Mortgage Directory private rates, October 2026 · lender websites, checked 4 November 2026 · Ontario Mortgages Act, Part III · Alberta Law of Property Act.
Talk it through with a licensed broker before you decide
Tell us what is going on in a few lines. We call you back the same day with what lenders will say, what it costs in dollars, and how you get back to a bank. If private is the wrong tool, we say so.
- Your full cost, in dollars, before you commit
- The lender named on your commitment letter
- A written plan to exit within 12-24 months
Asim Ali, Mortgage BrokerSurrey office · BC, Alberta and Ontario
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Read the post →Tell us three things. A licensed broker calls you today.
No credit check. No ID. No date of birth. We ask what a lender decides on: the property, the equity and the deadline.
- 1Same-day call from Asim Ali or a licensed colleague
- 2A range for rate, fees and APR on the call
- 3Written commitment in 1-2 business days if you go ahead
- 4Nothing to pay until the mortgage funds
Asim Ali, Mortgage Broker
Licensed in BC, Alberta and Ontario · (604) 591-3590