Private Mortgages

An Option When Banks Say “No”

If you’re having trouble getting approved through a bank, private mortgages in Kamloops can sometimes be a way forward. These are short-term options used when income, credit, or timing doesn’t quite fit traditional lending rules.

I’ve had a few clients locally run into this, usually self-employed, dealing with credit hiccups, or needing to move quickly.

How do they work

A private mortgage is still a mortgage, just funded differently.

Instead of a bank, the funds come from:

• individual investors
• mortgage investment corporations (MICs)
• private lenders

The focus is usually more on the property and available equity, rather than strictly your income on paper (nesto.ca).

Why people use this option

This usually comes up when:

• • income is harder to prove (you may have strong equity but temporary income issues)
  • you need quick financing
  • you’re planning to refinance shortly
  • credit needs time to recover

• the property doesn’t fit typical lender guidelines

More Canadians have been turning to private lending as traditional mortgage rules have tightened, especially for self-employed or credit-challenged borrowers (fcnb.ca).

What to expect with private mortgages

There are a few key differences compared to traditional financing.

Private mortgages are typically short-term, often around 6 months to 2 years, and may be set up as interest-only payments, meaning you’re not paying down the principal during the term (nesto.ca).

They also tend to come with higher interest rates and fees, since private lenders are taking on more risk than traditional banks (fcnb.ca).

Because of this, they’re generally used as temporary solutions, with the expectation that you’ll transition back to a traditional lender once your situation improves (alberta.ca).

Private mortgages: the exit plan matters

Before setting one up, there should always be a clear plan, whether that’s improving credit, increasing income, or refinancing into a traditional mortgage.

Regulators also emphasize having an exit strategy, since these are, again, meant to be short-term solutions (alberta.ca).

Quick questions about private mortgages

Are private mortgages common?
They’re not the majority, but they do come up in more complex situations where traditional lenders won’t approve.

Do private lenders check credit?
Sometimes, but equity and property value usually carry more weight than income or credit alone (nesto.ca).

Can you switch back to a bank later?
That’s typically the goal, since private mortgages are usually used as a short-term step before qualifying for traditional financing (creditcanada.com).

Thinking about using this as an option?

If you’re in a situation where traditional financing isn’t working, it doesn’t always mean the deal is off. It may just need a different approach. I’m happy to go through the options with you and see what is the best way forward for you.

Talk soon,
Sarah

Sources and additional information

• Government of Alberta – Mortgages overview
• Financial and Consumer Services Commission – Risks of private mortgages
• Nesto – What is a private mortgage in Canada
• Credit Canada – Private mortgages explained