Private and Alternative Mortgage Lenders in Ottawa: When They Make Sense

By the Ottawa Mortgages editorial team · Last reviewed: September 2026 · How we write our guides

What is a private or alternative mortgage lender? Alternative (“B”) lenders and private lenders finance borrowers who do not fit a bank’s standard rules, such as those with bruised credit, non-traditional income or short-term needs. In exchange for flexibility, they charge higher interest rates and fees and usually offer shorter terms, so they work best as a bridge to a better long-term solution.

Not every borrower qualifies with a bank, and that is not always a permanent situation. Alternative and private lending can help buyers, homeowners and investors in Ottawa close a purchase, stop a power of sale, or move quickly, but the cost is higher and the terms matter more.

Prime, alternative and private lenders

TypeTypical borrowerCost and terms
Prime lenders (banks, credit unions, monolines)Standard income, good creditLowest rates, standard fees
Alternative (B) lendersSelf-employed, credit issues, recent newcomers, higher debtHigher rates, lender fees, often one to two year terms
Private lendersShort-term needs, weaker credit or property, urgent timelinesHighest rates and fees, short terms, focus on property equity

Common reasons people use them

  • Credit challenges, such as recent late payments or a consumer proposal
  • Self-employed income that is hard to document
  • A quick closing on a purchase
  • Second mortgages for debt consolidation or renovations
  • Bridge financing between a purchase and a sale. See bridge financing in Ontario.
  • Stopping enforcement action while you arrange a longer-term solution

What to watch out for

  • Fees: Lender fees and broker fees are common. Ask for a total cost of borrowing.
  • Short terms: You will need a plan to refinance to a lower-cost mortgage when the term ends.
  • Prepayment and renewal terms: Read them carefully before you sign.
  • Independent legal advice: Ontario lenders and brokers must follow disclosure rules, and you should have your own lawyer review the documents.
  • Licensing: Confirm that the broker and brokerage are licensed with FSRA.

How to plan an exit

  1. Know the reason you are using alternative financing, and how it will change.
  2. Set targets, such as improving your credit or documenting two years of income.
  3. Ask a broker when you could qualify for a bank or credit union.
  4. Budget for the cost of switching, including any penalty.

See also: getting a mortgage with bad credit and self-employed mortgages.

Frequently asked questions

How much higher are alternative lender rates?

They are higher than prime rates, and private rates are higher again. The gap depends on your file and market conditions. Ask for a full cost comparison, including fees.

Can I get a private mortgage with bad credit?

Private lenders focus mainly on the property’s equity, so credit matters less, but you still need enough equity and a way to repay.

Are private mortgages regulated in Ontario?

Mortgage brokerages, brokers and agents are licensed by FSRA, and disclosure rules apply to many transactions. Always have a lawyer review the terms.

Explore your financing options with a licensed professional

Answer a few quick questions and we will connect you with a licensed Ontario mortgage professional. It is free to use and there is no obligation.

Get matched now

Important: Ottawa Mortgages is an independent information and referral service. We are not a lender, mortgage broker or mortgage brokerage, and we do not give mortgage advice or make credit decisions. If you ask to be connected, your details may be shared with a licensed Ontario mortgage professional, who may compensate us. Rates, rules and eligibility change often. Confirm details with a licensed professional and official sources, and check any Ontario mortgage broker’s licence with FSRA. Read our full disclosure.