Getting turned down by a bank can feel like a door slamming in your face. But in British Columbia, it doesn’t have to be the end of the road. Private mortgages exist for exactly this situation, and for many borrowers, they’re a practical bridge to getting back on track. Below, we answer the questions we hear most often.
What Is a Private Mortgage?
A private mortgage is a loan secured against real estate, funded by a private lender rather than a bank or credit union. The lender could be an individual investor, a mortgage investment corporation (MIC), or a private lending company. Unlike traditional lenders, private lenders base their lending decisions primarily on the value of the property, not just your credit score or income documentation.
Who Actually Uses Private Mortgages?
You might be surprised, but private mortgage borrowers span a wide range of situations. Common reasons people seek private financing include:
- Recent credit problems, including a consumer proposal or discharged bankruptcy
- Self-employment income that’s hard to document in a way banks accept
- A property that doesn’t meet conventional lending criteria
- The need to close quickly, where there isn’t time for bank approvals
- Needing to consolidate high-interest debt before it snowballs further
If any of these sound familiar, you’re far from alone.
How Is a Private Mortgage Different from a Bank Mortgage?
The biggest differences come down to flexibility and cost. Banks follow strict federal guidelines; they’re looking at your credit score, your income-to-debt ratios, and whether you pass the mortgage stress test. Private lenders have more room to look at the full picture.
That flexibility comes at a price, though. Private mortgage rates in BC are higher than what you’d get at a bank, and most private mortgages come with shorter terms, typically one year. There are also lender fees involved. It’s important to go in with clear expectations on the cost side.
What Are Typical Interest Rates for a Private Mortgage in BC?
Rates vary based on the property, the loan-to-value ratio, your situation, and the lender. Generally speaking, you can expect rates somewhere in the range of 8% to 14% per year, though this can shift depending on market conditions and risk profile. First mortgages tend to sit at the lower end of that range; second mortgages carry more risk for the lender, so rates are higher.
Lender fees, typically 1% to 3% of the loan amount, are usually charged at the time of funding. Your mortgage broker can walk you through a full cost comparison so there are no surprises.
How Do I Qualify for a Private Mortgage in BC?
The two things private lenders care about most are the property value and the loan-to-value (LTV) ratio. Most private lenders in BC will lend up to 75% of the appraised value of the property, meaning you need meaningful equity, or a solid down payment on a purchase.
Beyond that, lenders want to understand your exit strategy. How are you planning to repay this loan or refinance into conventional financing when the term is up? Having a clear plan matters. Your credit score still plays a role, but it doesn’t need to be perfect.
How Quickly Can I Get Approved?
This is one of the biggest advantages of private lending. Where a bank approval can take weeks, private mortgage approvals can often happen in days. In time-sensitive situations, such as a purchase with a tight completion date, or stopping a power of sale, that speed can make all the difference. Once approved, funding typically follows within a few business days of the required paperwork being in order.
What Can I Use a Private Mortgage For?
The short answer: almost any real estate-related need. Borrowers use private mortgages to:
- Complete renovations to increase property value before refinancing
- Purchase a property when they don’t qualify for conventional financing
- Refinance to access equity or consolidate debt
- Bridge financing, to cover the gap between buying a new home and selling the existing one
- Stop a foreclosure or power of sale and buy time to find a better solution
Is a Private Mortgage a Long-Term Solution?
For most borrowers, no. Private mortgages are designed to be a short-term tool, typically used for one to two years while you address the underlying issue. Maybe that means rebuilding your credit, getting two years of self-employment income on paper, or paying down debt to improve your debt-service ratios. The goal, in most cases, is to graduate into a conventional A or B lender mortgage when the time is right.
Going into a private mortgage with that mindset, and a plan to execute, makes a real difference to your long-term financial outcome.
How Do I Find a Trustworthy Private Lender in BC?
That’s where Spark Mortgage comes in. We’re a BC-based mortgage team that specializes in finding solutions for borrowers who’ve been turned down by traditional lenders. We work with a network of trusted private lenders, and we’ll shop your file to find terms that actually make sense for your situation.
We take the time to understand where you’re at, what your options are, and what a realistic path forward looks like. No pressure, no jargon, just straight answers.
Ready to Explore Your Options?
A bank decline doesn’t define your situation. Private mortgages give BC borrowers a real path forward, and with the right guidance, you can use one strategically to get from where you are to where you want to be.
If you have questions about whether a private mortgage might be right for you, we’re happy to talk through your situation. Reach out to the team at Spark Mortgage.
