Quick answer: A B lender is a regulated trust company, credit union or alternative lender that still verifies your income but accepts credit problems and unusual income. A private lender is an individual investor or mortgage investment corporation that lends mainly on your home's equity. B lender mortgages cost less, amortize and run one to three years. Private mortgages cost more, are usually interest only and run about 6 to 24 months. If a B lender can approve you in time, it is almost always the cheaper choice.
Clients often bring me a private offer and ask if it is fair. My first question is whether a B lender could do the job for less.
Who are B lenders and private lenders?
B lenders are institutions: trust companies, some credit unions and alternative mortgage lenders that lend under written underwriting rules, between the banks and private money. Our pages on B lender mortgages in BC and B lender mortgage companies cover the basics.
Private lenders are individuals who lend their own money, and mortgage investment corporations that pool money from many investors. Each sets its own rules. Our guides to private lenders in BC and private mortgage lenders in Surrey explain that market.
How does qualifying differ between the two?
- Income: a B lender wants proof, such as pay stubs, tax returns or business bank statements. A private lender leans on equity, not income.
- Credit: B lenders accept past problems with a reasonable explanation. Private lenders will often lend through serious or very recent problems. See our bad credit mortgage guide.
- Debt ratios: B lenders often allow more room than the insured limits of 39% GDS and 44% TDS. Private lenders rarely work to a set ratio.
- Stress test: OSFI requires federally regulated lenders to qualify uninsured borrowers at the higher of the contract rate plus 2% or 5.25%. B lenders that are federally regulated trust companies apply it. Credit unions are regulated provincially, so their rules can differ. Private lenders do not use it.
- Loan to value: B lenders commonly lend up to about 80% of value. Private lenders commonly stop around 65% to 75% on a first mortgage, and about 80% combined when they lend behind another mortgage.
What do B lender and private mortgages cost?
B lender rates usually sit somewhat above bank rates, and most files carry a lender fee. Many B lenders pay the broker, so you often pay no broker fee. Private rates are higher, with a larger lender fee and often a broker fee. Both need an appraisal and legal work. Any broker fee must be disclosed to you in writing before you sign, and BC law requires it to be counted in the APR on your cost of credit disclosure. The Criminal Code caps most consumer loans at 35% APR, a legal ceiling rather than a fair price.
How do terms, renewals and exits differ?
B lender terms usually run one to three years, with payments that include principal. At maturity you renew, switch, or move back to a bank.
Private terms usually run 6 to 24 months, often interest only, so the balance does not drop. Renewal is not automatic. The lender may offer a new term with a renewal fee, or ask to be paid out. The usual path is private, then B lender, then bank: fix the problem, show 12 months of clean history, and refinance while your equity fits the next lender's limit. Federally regulated lenders cap refinances at 80% of value.
Which lender suits which situation?
| Situation | B lender | Private lender |
|---|---|---|
| Provable income, bruised credit | Usually the right fit | Rarely needed |
| Self employed with documents | Often approves | Only if income cannot be shown |
| Active consumer proposal or recent missed payments | Sometimes, case by case | Often the only option |
| CRA arrears that must be paid at closing | Possible if income qualifies | Common solution |
| Closing in days, or a bridge before a sale | Often too slow | Built for speed |
| Keeping a low rate first mortgage | Few offer second mortgages | A second mortgage is common |
How do the costs compare on the same BC home?
This example is for illustration only; your rate, fees and approval depend on your full application. A Surrey homeowner with a home appraised at $1,000,000 needs a $700,000 first mortgage, which is 70% of value. Interest on both is calculated monthly over 12 months.
| Item | B lender | Private lender |
|---|---|---|
| Illustrative rate, 12 month term | 6.49%, 30 year amortization, APR about 7.5% | 9.49% interest only, APR about 13.2% |
| Monthly payment | $4,420 | $5,536 |
| Interest for 12 months | $45,200 | $66,430 |
| Lender fee | $7,000 (1%) | $14,000 (2%) |
| Broker fee | $0 | $10,500 (1.5%) |
| Appraisal | $500 | $500 |
| Legal costs | $1,500 | $2,000 |
| Total cost for the year | $54,200 | $93,430 |
| Principal paid down | about $7,840 | $0 |
The private mortgage costs $39,230 more for the year, and the B lender balance is about $7,840 lower at the end. The APRs above include the lender and broker fees. If the private lender renewed for another 12 months with a 1% renewal fee, that would add $7,000 plus another $66,430 of interest. Private money is worth it only when it solves a problem a B lender cannot.
What protections do you have in BC?
- Registered brokers: BCFSA says people and companies that carry on mortgage broker activities in BC, including lending funds on the security of mortgages, must be registered.
- Written disclosure: your broker must disclose costs, risks and any fee in writing before you sign. BC's consumer protection law also requires a disclosure statement showing the APR and the total cost of credit at least 2 business days before you sign or make a payment, unless you waive that period.
- Independent legal advice: have your own lawyer or notary review the prepayment, renewal and default clauses before you sign.
What are the key takeaways?
- B lenders check income; private lenders lend mainly on equity.
- B lender mortgages cost less, amortize and run one to three years.
- Private mortgages run about 6 to 24 months, often interest only, with larger fees.
- Compare the APR and total cost over the real term.
- Plan the move from private to B lender to bank before you sign.
Not sure which fits? Book an appointment and I will compare B lender and private options with the APR and every fee in writing.
What other questions do readers ask?
Is a B lender cheaper than a private lender in BC?
Usually, yes. B lenders charge less interest and lower fees than private lenders and they amortize the loan, so you also pay down principal. The trade off is that a B lender needs income you can document and takes a little longer to approve.
Do private lenders use the mortgage stress test?
The federal stress test applies to federally regulated lenders. Private lenders and mortgage investment corporations are not covered by it, so they focus on your equity, the property and your exit plan rather than a qualifying rate.
Can I go from a private mortgage to a B lender?
Yes, that is the most common exit. Once the reason you needed private money is fixed, such as filed taxes, cleared tax debt or a year of on time payments, a B lender can refinance the private loan if your income and equity fit its rules.
Does a private mortgage renew automatically?
Not usually. Most private lenders offer a new term near maturity, often with a renewal fee and sometimes a higher rate. If they do not renew, the full balance is due, so start planning your exit several months before the term ends.
Are private mortgage lenders regulated in BC?
BCFSA says individuals and companies that carry on mortgage broker activities in BC, which include lending funds on the security of mortgages, must be registered. Your cost of credit disclosure must show the APR, and the Criminal Code caps most consumer loans at 35% APR.
Where do these numbers come from?
- OSFI: minimum qualifying rate for uninsured mortgages
- BCFSA: mortgage brokers in British Columbia
- BC Business Practices and Consumer Protection Act, Part 5: credit agreements and cost of credit disclosure
- Criminal Code, section 347 (criminal rate of interest)
Published November 10, 2026. This article is general information, not personal financial advice. Rates and programs change, and every approval depends on your full application. Asim Ali is a licensed mortgage broker with Dominion Lending Centres A.I.M.I. Collective Mortgage Group.