How Much Does an Alternative Mortgage Cost?

An alternative mortgage costs more than a bank mortgage — that’s the trade for flexibility and speed. But “more” varies enormously by tier, and the headline rate is only part of the picture. This guide breaks down the full cost of B-lender and private financing so you can judge it honestly against your alternative: waiting, or losing the deal entirely.

All figures here are illustrative, move with the market, and vary by file — think of them as ranges to frame the conversation, not a quote. Your exact rate and fees are confirmed in writing before you commit. For the service, see alternative lending and B-lender mortgage.

A B-lender is the cheapest step beyond the banks. Illustratively, B-lender rates run roughly 0.5–1.5% above A-lender pricing — so if a bank’s best is around 4%, a B-lender might be roughly 4.5–5.5%, depending on the file. On top of the rate, most B-lender programs carry a lender fee of about 1% of the mortgage, typically deducted on funding.

The good news on fees: on most standard B-lender files there is no separate broker fee to you — the lender compensates the brokerage, just like on an A-lender deal. A few specialty B-lender programs carry a small, always-disclosed broker fee (typically 0.5–1%). Because these are close to bank-speed and bank-cost, a B-lender is the right first stop whenever the file supports it.

Private financing is the most expensive tier, priced for equity-based risk and speed. Per CMHC’s Residential Mortgage Industry Report, private lenders averaged about 9.6% on single-family lending in Q3 2025. Second mortgages price higher than firsts. On top of the rate, expect a lender fee and a broker fee, commonly around 1–2% each, plus legal and appraisal costs.

A worked, illustrative example: a $100,000 private second for 12 months at 10% interest-only, with a 2% lender fee, a 1.5% broker fee, and about $1,900 in legal and appraisal, runs roughly $15,400 in total cost of borrowing over the term. The lesson is to look at the all-in cost, not the headline rate — and to insist every figure is in writing. Full detail on our private mortgage page.

Whatever the tier, budget the full stack so nothing surprises you at the lawyer’s office:

• Lender fee — ~1% at a B-lender; ~1–2% on private.
• Broker fee — usually none to you on standard B-lender files; ~1–2% on private, disclosed and consented to in writing.
• Legal fees — your lawyer’s cost to close and register the mortgage.
• Appraisal — most alternative lenders require a current one.
• Title insurance and disbursements — standard closing costs.

A legitimate broker discloses every one of these in writing before you commit. Fees deducted from your advance require your written consent. If anyone quotes a fee before seeing your file, or springs one at closing, that’s a red flag.

The rate looks alarming next to a bank’s — until you weigh it against the alternative. An alternative mortgage is short-term: you pay the premium only for the 12–24 months it takes to fix the file and refinance to A-pricing. And it often saves money in ways the headline rate hides — consolidating 20%+ credit-card debt into a mortgage, clearing CRA interest and collection pressure, or preserving the equity a forced sale would erode.

Run the comparison honestly: the alternative premium for a year or two, versus the cost of the problem it solves (waiting two years to qualify, carrying high-interest debt, or losing a purchase). For most files that actually need alternative lending, the math favours acting — which is exactly why the exit plan matters so much: it’s what caps the premium at a short, bounded cost.

Four levers reduce what you pay. Use the lowest tier that fits — don’t pay private pricing for a B-lender problem; a good broker steers you to the cheapest lender that will actually approve you. Keep the loan-to-value low — more equity earns sharper rates and wider lender choice at every tier. Negotiate — margins exist at every alternative lender, and 25–75 bps off list plus fee reductions are routine on a strong file. Keep the term short — pay the premium only while you need it, timed to your exit.

Above all, plan the exit to A-pricing from day one. The cheapest alternative mortgage is the one you leave on schedule.

Ranges frame the conversation; your file sets the price. The only way to know what an alternative mortgage costs you is to model your specific situation — tier, loan-to-value, income story and exit — against current pricing.

Mortgage Squad Advisors (FSRA #13737) discloses every rate and fee in writing up front, negotiates the margin, and maps the exit that caps the cost. Compare the tiers in our A vs B vs private guide, read the alternative lending overview, or get a no-obligation assessment — no credit pull to begin.