Why do private lenders say yes when the bank says no?

Why does the bank say no when I have lots of equity?

Because a bank isn't allowed to say yes on equity alone. It has to pass you through a set of rules first, and equity doesn't fix a failed rule.

Here are the four rules I see stop people most often:

• The stress test. Under OSFI Guideline B-20, a federally regulated bank must qualify you at your rate plus 2%, or 5.25%, whichever is higher. You might afford the real payment and still fail the test.
• Income paperwork. Banks want T4s, or two years of Notices of Assessment if you're self-employed. If your tax returns show low income after write-offs, the bank uses that low number.
• Credit-score cut-offs. Most banks want about 680 or more. A 640 can be a no, even with a paid-off house.
• Insurer rules. With less than 20% down, CMHC, Sagen or Canada Guaranty insures the loan. They set their own limits on debt ratios and credit.

Who are private lenders, and why don't the bank rules apply to them?

Private lenders are mortgage investment corporations (MICs), private funds and individual investors. They aren't federally regulated deposit-takers, so OSFI's B-20 stress test doesn't bind them.

A bank lends its depositors' money. A private lender lends its investors' money. Many lenders, like Three Point Capital, VWR Capital, CMI, Westboro and BFT, say on their sites that they only work through licensed brokers.

Private doesn't mean unregulated. The broker who arranges your loan is licensed by BCFSA in BC, RECA in Alberta or FSRA in Ontario. You get written disclosure of every fee and the APR before you sign. For the different kinds of private lender, see my older post on understanding your private lender options.

What does a private lender actually look at?

Three things: your equity, how easy your home would be to sell, and your exit. Your income and credit still get a look, but they're not the gate.

Why are private lenders so much faster than banks?

Because there are fewer rules to check and fewer people to ask. A private commitment usually takes 1-2 business days. Funding usually takes 5-12 days. A bank takes 2-6 weeks.

No stress test. No insurer. Often the person who reads the file is the person who decides. That's why private money works for deadlines like a CRA lien or a notice of sale.

Why does a private mortgage cost so much more?

Because the lender carries risk the bank won't, and its investors expect to be paid for it. That risk shows up in the rate and the fees.

In November 2026, private first mortgages cost 7.49% to 10.99%, interest-only. You also pay a 1-2% lender fee, a 1-2% broker fee, $1,500-3,000 in legal costs and a $400-800 appraisal. A bank charges 4.5-5.5% with no lender fee.

Illustrative example. A $500,000 private first mortgage at 8.49% for 12 months costs $42,450 in interest. That's $3,538 a month, interest-only. Fees and costs add about $12,600. The total is $55,050, an APR of 11.01%. See every fee and run your own numbers.

Why are private lenders stricter on how much they'll lend?

Because your equity is their only real safety net. If the loan goes bad, the lender gets paid by selling the home. So it leaves room for a falling market, legal costs and missed payments.

So most cap a first mortgage at 75% of value, and a first and second together at about 80%. Some go lower. Privan Capital publishes 75% for urban homes and 65% for rural. Mandate Mortgage publishes a 65% maximum. A bank can go higher because it leans on your income and the insurer, not just the house.

Why has private lending become such a big part of the market?

Because more people fail the bank's rules, even when they own good homes. In Ontario, FSRA found that 15.8% of mortgages registered in 2024 were private, by count.

The stress test has applied to uninsured bank mortgages since 2018. Add higher debts, tougher renewals and more self-employed borrowers, and lots of people land outside the bank box. Private lenders fill that gap.

Why should I care whether my private lender will renew?

Because if you can't leave at month 12, your lender decides what happens next. Renewal with a private lender is a privilege, not a right.

CMHC's Fall 2026 report shows 90-day arrears at mortgage investment entities, which include MICs, at 2.57%. At banks it was 0.28%. A lender with rising arrears can get pickier at renewal or ask you to leave.

What else do people ask about private lenders?

If the bank said no and you're not sure why, call me at (604) 591-3590. I'll tell you which rule you tripped, whether a B-lender can still help, and what a private loan would really cost. Check your options here.