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, not today’s rates. They move with the market and vary by file, so think of them as ranges to frame the conversation, not a quote. For current bank pricing, see our live rate board. 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 often run roughly 0.5–1.5% above A-lender pricing. So, assuming a bank rate of 4% for the example, 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, often around 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, because the lender compensates the brokerage, just as on an A-lender deal. A few specialty B-lender programs carry a broker fee (illustratively 0.5–1%), and in Ontario any brokerage fee must be disclosed in writing and built into the cost of borrowing and APR you are shown¹. Because B-lenders sit closest to bank pricing, 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, with higher rates, higher fees and often interest-only payments². For a data point, CMHC’s Residential Mortgage Industry Report found the largest private lenders averaged about 9.6% on single-family lending, at roughly 58% loan-to-value, in Q3 2025³. Second mortgages price higher than firsts. On top of the rate, expect a lender fee and a broker fee, often around 1–2% each (illustrative), plus legal and appraisal costs.

A worked, illustrative example: a $100,000 private second for 12 months at an assumed 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 ($10,000 interest + $2,000 + $1,500 + $1,900). 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: often around 1% at a B-lender; around 1–2% on private (illustrative).
• Broker fee: usually none to you on standard B-lender files; often around 1–2% on private, disclosed 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.

In Ontario, a brokerage must give you written disclosure of its fees, included in the cost of borrowing and APR, and of the material risks of the mortgage it recommends¹. Get every item in writing before you commit. 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 meant to be 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 can save money in ways the headline rate hides: consolidating high-interest credit-card debt into a mortgage, clearing CRA arrears before more interest builds, 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 many files that genuinely 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: alternative lenders have room on pricing, and a strong file can often secure a lower rate or a reduced fee. 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, with no credit pull to begin.