Alternative and private mortgages, explained plainly.
Alternative and private lenders can help when a prime lender can't, usually at a higher cost. They work best as a short-term step with a clear plan to move on.
Alternative (B) lenders
Regulated lenders such as trust companies and some credit unions, with more flexible criteria than prime lenders.
Private lenders
Individuals or mortgage investment corporations. Often short terms and higher costs.
The exit plan
Before you start, decide how and when you'll move back to a lower-cost mortgage.
When they may be appropriate
Alternative or private financing is sometimes the right short-term tool, for example:
- Income that is real but hard to document to a prime lender's standard
- Credit that is recovering from a past event
- A time-sensitive purchase or bridge financing
- Properties prime lenders won't finance
- Consolidating debt to stabilize finances, with a plan to return to prime
What it costs
Expect higher interest rates than prime lenders, and often lender fees and broker fees as well. Private mortgages are frequently interest-only, with terms of one or two years, and may charge for renewals. You'll also pay legal and appraisal costs.
In Ontario, you receive written disclosure of the cost of borrowing and all fees before you commit. Read it, and ask about anything that isn't clear.
Risks to understand
A short term means you must renew or refinance soon, possibly when rates or your circumstances have changed. If the exit plan doesn't work out, you may face renewal fees, higher costs or, in the worst case, a lender enforcing the mortgage.
This is why expensive lending should never be the default. It is only worth considering when a lower-cost option isn't available and the benefit outweighs the cost.
Qualification depends on lender underwriting. Rates, terms, fees and penalties vary by lender and are subject to change. Examples are illustrative only and are not a commitment to lend. Content reviewed October 20, 2026. Lending rules change; confirm current requirements before relying on them.
Common questions
Is a private mortgage a bad idea?
Not always, but it is expensive. It can make sense as a short-term solution when it solves a specific problem and there is a realistic plan to move to a lower-cost lender. It shouldn't be used when a prime or alternative lender would approve you.
What's the difference between an alternative lender and a private lender?
Alternative lenders are institutions with set lending policies, usually offering longer terms than private lenders. Private lenders are individuals or pooled funds, typically with shorter terms, higher rates and more fees.
How do I get back to a prime lender?
Usually by fixing what kept you from qualifying: rebuilding credit, documenting income over two years, paying down debt or building equity. Planning that from day one is part of arranging the mortgage.
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Let's discuss your mortgage.
Whether you're purchasing, refinancing, or reviewing an existing mortgage, start with a conversation about your circumstances and available options.