BC and Alberta Private Mortgage Refinancing: When And How To Do It
November 1, 2026 | Posted by: Alex Vinarski
Private Mortgage Refinancing: When and How to Do It
A private mortgage is rarely meant to last forever. For most borrowers it’s a bridge, and refinancing is how you either get onto that bridge or get off it. Here’s when refinancing with a private lender makes sense, and how the process works.
When Does Private Mortgage Refinancing Make Sense?
Your bank won’t renew or refinance. If your mortgage is up for renewal and your income, credit, or property doesn’t fit the bank’s criteria, a private lender can step in, often without income verification.
You’re behind on payments or facing foreclosure. Refinancing with a private mortgage can bring your existing mortgage, arrears, and other overdue debts current and stop the foreclosure process. Time matters here, so the sooner you call, the more options you have.
You want to consolidate high-interest debt. Credit cards, lines of credit, and tax arrears can cost far more than a mortgage. Rolling them into one secured loan can free up cash flow, even at a private mortgage rate.
You’re self-employed and your income is hard to document. If your tax returns don’t show what you actually earn, a private refinance can use the equity in your property instead of a T4.
You need funds fast. For a business opportunity, an investment property, or renovations, private funding can close in days. I’ve had a deal funded in 3 days.
You already have a private mortgage that’s coming due. Many private mortgages are short-term, so you may need to renew or refinance with another private lender, or move to a bank or alternative lender once your situation has improved.
How Does the Process Work?
- Free consultation. We review your property, your equity, your credit, and why you’re refinancing, along with your plan for getting out of the private mortgage later.
- Choose the right lender. Rates and terms vary between private lenders. I compare them to find the best private mortgage rate for your file.
- Appraisal. The lender orders an appraisal to confirm your property’s value. This is usually the only fee paid upfront.
- Approval and commitment. Once you accept the terms, the lender issues a commitment letter, and the file goes to the lawyers.
- Legal work and funding. Your lawyer and the lender’s lawyer prepare the documents. Your existing mortgage is paid out and any remaining funds go to you.
What Will It Cost?
Private mortgages have a different fee structure than bank mortgages:
- Rates: from 5.5% for first mortgages and from 7.99% for second mortgages, depending on loan-to-value, property marketability, and credit
- Appraisal: $300 to $600
- Lender and broker fee: usually around 2% for a first mortgage and 4% for a second (this can vary)
- Legal fees: $2,500 to $4,000, covering both your lawyer and the lender’s lawyer
Most fees are deducted from the mortgage proceeds, so you aren’t paying them out of pocket. Also check your current mortgage for a prepayment penalty before you refinance, since it can affect the numbers.
How Much Equity Do You Need?
Private lenders look mainly at your equity. Current maximum loan-to-value in BC is typically 65% for condos and 75% for townhouses and houses, with exceptions up to 80%. In practice, you’ll usually need around 25% equity (20% on very strong files).
Plan Your Exit Before You Start
Because private mortgages cost more than bank mortgages, the best approach is to refinance with a clear plan for moving back to traditional financing. That might mean rebuilding your credit, showing a year or two of stable income, finishing a renovation, or selling another asset. If you plan the exit before you start, a private mortgage works as a stepping stone rather than a long-term cost.
Private Mortgage Refinancing: FAQ
Can I refinance a private mortgage with a bank?
Yes. Many borrowers use a private mortgage as a short-term solution, then move to a bank or alternative lender once their credit or income documentation improves. It helps to plan this exit before you take the private mortgage.
How fast can a private mortgage refinance close?
Much faster than a bank. Some files close in a few days, and I’ve had a deal funded in 3 days. Timing depends on how quickly the appraisal and legal work can be completed.
Do I need good credit to refinance with a private lender?
No. Private lenders focus mainly on your equity and the marketability of your property. Credit still affects your rate, but past credit problems won’t automatically disqualify you.
Is income verification required?
Not for a private mortgage. Lenders base their decision on your property and equity, which is why private refinancing works well for self-employed borrowers.
How much equity do I need?
Typically around 25% (20% on very strong files). In the current BC market, maximum loan-to-value is generally 65% for condos and 75% for townhouses and houses, with exceptions up to 80%.
What does it cost to refinance with a private lender?
Rates start from 5.25% for first mortgages and 9% for second mortgages. Fees usually include an appraisal ($300 to $600), a lender and broker fee (around 2% for a first mortgage, 4% for a second), and legal fees ($2,500 to $4,000). Only the appraisal is normally paid upfront, and the rest comes out of the proceeds.
Can a private refinance stop foreclosure?
Often, yes. A private mortgage can pay out your current mortgage and arrears and bring everything current. The earlier you act, the more options you’ll have, so don’t wait until the final deadline.
