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Private mortgage

Definition

A mortgage funded by individuals or private investment funds rather than banks.

Used when banks decline — bad credit, irregular income, short timeline, property condition. Rates 7-12%+; usually short-term.

Private lenders care about the property and the equity far more than your credit score or income documents. If there's enough equity and a believable exit, they can fund in days — invaluable for power-of-sale rescues, tax arrears, or closing on a deal the bank can't approve in time.

The trade-off is cost: rates typically run 7–12%+, plus lender and broker fees, on short interest-only terms of one to two years. A private mortgage is a bridge, never a home — the plan from day one is to repair the file and refinance to a B or A lender.

Used deliberately and with a real exit strategy, private financing solves problems no bank will touch. Used without a plan, it gets expensive fast — which is why the exit matters more than the rate.

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A lender

A bank or monoline that prices its lowest rates and tightest underwriting against borrowers who fit prime credit, income, and property criteria. The big banks (RBC, TD, Scotia, BMO, CIBC, NB) and major monolines (MCAP, First National, MERIX) are A lenders.

B lender

An alternative ("alt-A") lender that prices higher than A lenders but flexes on credit history, income documentation, property condition, or self-employed earnings. Examples include the alternative-lending programs of Equitable Bank and Home Trust.

Bridge financing

Short-term loan that lets you close on a new home before the sale of your existing one funds. Priced at prime + premium, secured against both properties, typically up to 90-120 days.

Closed mortgage

A mortgage that limits how much extra you can prepay each year and charges a penalty if you break the term early. Almost all standard Canadian mortgages are closed because the rates are materially lower than open.

Collateral charge mortgage

A mortgage registered against your property for more than the actual loan amount, letting you increase the limit later without re-registering. Common at TD and Scotia. Makes inter-lender switches harder mid-term.

Conventional mortgage

A mortgage with at least 20% down. No mortgage default insurance required. Pricing is typically higher than insured because the lender carries more of the credit risk.