Private Mortgage Lenders in BC — Last Resort Financing

A private mortgage is a loan from an individual investor or private lending company rather than a bank, credit union, or institutional lender. Private lenders use their own capital and make lending decisions based primarily on the property's value and equity — not your income, credit score, or employment history.

Private mortgages exist to serve borrowers who don't qualify with traditional lenders. They fill an important gap in the market, but they come with significantly higher costs. I view private lending as a temporary tool — a bridge to get you from where you are now to where you need to be.

Despite the higher costs, there are situations where private lending is the right short-term solution:

• Credit recovery in progress — You're rebuilding credit after a consumer proposal, bankruptcy, or collections, but need financing now. A private mortgage bridges the gap while your credit improves.
• Time-sensitive purchases — You need to close quickly (estate sales, foreclosure opportunities, or firm closing dates) and traditional lender timelines don't work.
• Income verification challenges — Self-employed borrowers with strong assets but income that's difficult to document, even for B-lenders.
• Property doesn't qualify — The property type or condition doesn't meet traditional lending standards (e.g., rural properties, properties requiring significant repairs).
• Debt consolidation urgency — High-interest debts are creating financial pressure, and consolidating into a private mortgage (even at 8–12%) saves money compared to credit card rates of 20%+.
• Preventing power of sale — You're behind on mortgage payments and need emergency refinancing to avoid losing your home.

Private lending is more expensive than traditional or B-lender financing. Here's what to expect:

Private lenders have simpler qualification criteria than banks or B-lenders:

The property is the primary qualification factor. Private lenders want to see a property that can be easily sold if needed — which is why location matters. Properties in Surrey, Vancouver, and the broader Metro Vancouver area generally qualify more easily than rural or remote properties.

I believe in full transparency. Here are the risks of private mortgage lending:

• High cost of borrowing — Interest rates of 8–15% plus fees of 3–8% make private mortgages expensive. On a $400,000 mortgage at 10%, you're paying $40,000 per year in interest alone.
• Short terms create pressure — With 6–24 month terms, you must qualify elsewhere at renewal or face higher renewal costs. If your situation doesn't improve, you could be trapped.
• Compounding fees — Each renewal may involve new lender fees, broker fees, and legal costs. Multiple renewals can erode your equity quickly.
• Power of sale risk — If you can't make payments or refinance at term end, the lender can initiate power of sale proceedings on your property.
• Unregulated lenders — Unlike banks, private lenders are not regulated by OSFI. Working through a licensed mortgage broker provides an important layer of protection.

Every private mortgage I arrange includes a clear exit strategy. Here are the most common paths to transitioning out:

• Credit rebuilding timeline — If bad credit is the issue, I create a month-by-month plan to improve your score. Most borrowers can transition to a B-lender within 12–24 months with disciplined credit management.
• Income documentation — If you're self-employed, I advise on which tax filing strategies will help you qualify with institutional lenders at renewal.
• Equity growth — Property appreciation and principal payments increase your equity, potentially qualifying you for a refinance with a traditional lender.
• Sale and purchase — In some cases, selling the property and purchasing one within your qualifying range is the most sensible option.
• Partner buyout — If the private mortgage was due to a separation or partnership dissolution, the exit may involve restructuring ownership.

I always explore B-lender options before recommending private lending. B-lenders offer significantly lower costs and longer terms. Private lending is reserved for situations where even B-lenders can't help — typically severe credit issues, unusual properties, or time-sensitive transactions.