Lending pathways

Ontario mortgage options explained: A, B, and private lending

Most people are never told there is more than one lending tier in Canada — only that the answer was no. Here is how the tiers differ, what each realistically costs, and how to judge which conversation is worth having.

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Three tiers

Who each lender type is built for

Nothing here is a ranking. Each tier solves a different problem, and the cheapest option is only the best option if you actually qualify for it.

Traditional lenders

Banks, credit unions, and monoline lenders.

Typically fits: Documented, stable income, a healthy credit profile, and manageable total debt.
Cost profile: Lowest cost when you qualify. Rarely any lender or brokerage fee.
Trade-off: Guidelines are rigid. One weak element — a gap in income documentation or a recent credit event — can end the application even when everything else is strong.

Alternative (B) lenders

Trust companies and specialised lenders built for non-standard files.

Typically fits: Self-employed income, bruised or rebuilding credit, unusual properties, higher debt ratios.
Cost profile: Higher interest than traditional lending, and usually a lender fee, a brokerage fee, or both.
Trade-off: Terms are often shorter, typically one to three years, so an exit plan matters as much as the approval itself.

Private lenders

Mortgage investment corporations and individual investors.

Typically fits: Short-term, equity-driven situations: arrears, tight deadlines, or a file that needs time to be repaired.
Cost profile: Highest interest, plus lender, brokerage, legal, and appraisal costs.
Trade-off: Intended as a bridge, not a destination. Nobody should enter a private mortgage without a written, realistic exit strategy.

Costs to confirm in writing

Alternative and private mortgage financing may involve higher interest rates, lender fees, brokerage fees, legal fees, appraisal costs, and shorter terms than traditional financing. The suitability, total cost, and exit strategy should be reviewed before proceeding.

No outcome is guaranteed

No approval, rate, or outcome is guaranteed. Every situation is reviewed individually.

Start from your situation instead

Declined Mortgage Applications

Understand why an application was declined and which other lender categories may still consider your situation.

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Bruised Credit Mortgages

Understand how past credit events affect mortgage options and what can realistically be done about them.

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Self-Employed Mortgages

For business owners, contractors, and commissioned earners whose declared income understates their capacity.

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Debt Consolidation and Equity Take-Out

Review whether consolidating high-interest debt into your mortgage genuinely improves your position.

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Alternative Mortgage Solutions

How alternative lenders assess files differently from banks, and what that flexibility actually costs.

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Private Mortgage Solutions

Short-term, equity-based financing for specific situations — reviewed honestly, including the exit.

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Mortgage Refinancing

Restructure an existing mortgage to access equity, consolidate obligations, or change terms.

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Mortgage Renewals

Review renewal options early — especially when income, credit, or the household has changed.

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Mortgage Arrears and Urgent Situations

Time-sensitive situations including arrears, closing deadlines, and enforcement pressure.

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Newcomer Mortgage Options

For newcomers with limited Canadian credit history but genuine financial capacity.

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Purchase Financing

Know your realistic financing capacity before making an offer, not after.

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Common questions about lending tiers

Is an alternative mortgage a bad mortgage?

No — but it is a more expensive one, and it should serve a purpose. Alternative lending exists so that a temporary situation does not have to become a permanent barrier to homeownership. Its usefulness comes from the plan attached to it.

How long do people usually stay in alternative financing?

It varies. Many files aim for a return to traditional lending at the end of a one- to three-year term, provided the underlying issue improves in the meantime. That is not a guarantee — it depends on credit, income, property value, and lender guidelines at the time.

What fees should I expect to be told about?

Before you commit, you should receive written disclosure of interest rate and term, lender fee, brokerage fee, appraisal cost, legal cost, and any prepayment or discharge terms. If a number is missing, ask for it in writing.

How is the broker compensated?

Compensation may come from the lender, from a brokerage fee charged to you, or a combination. Whichever applies to your file is disclosed in writing before you sign anything.

Information on this website is general in nature and is not a commitment to lend, an approval, legal advice, tax advice, or financial advice. Mortgage availability, rates, terms, fees, and approval depend on the applicant, the property, lender requirements, market conditions, and applicable law. An application and supporting documents may be required.