Private Mortgage Lenders in Québec: When Traditional Banks Say No (2026 Update)

Getting turned away by a bank doesn't mean your plans are over. Private mortgage lenders in Québec offer another path for borrowers who need financing but don't fit bank rules — a self-employed worker, a recent separation, a low credit score or a temporary income dip. Private money is more expensive, and it's meant to be temporary. This 2026 update explains how private lending works, what it costs, and how to use it without getting stuck.

Why banks say no

Federally regulated banks follow strict underwriting rules: the stress test, debt-service ratios of about 39% (housing) and 44% (total debt), documented income and acceptable credit. Common reasons for a decline include:

• Self-employed income that's too low on paper after write-offs
• Recent late payments, collections, a consumer proposal or bankruptcy
• Debt ratios over the limit, often because of high-interest balances
• Arrears on a mortgage or property taxes, or a CRA or Revenu Québec balance
• Unusual properties or timing that doesn't fit a bank's process

Alternative lenders first, private lenders second

Between banks and private money sits a middle tier: alternative lenders, such as trust companies and some credit unions. They're regulated, price above the banks but well below private lenders, and accept files the banks decline. We always check this tier first, because the cheapest approval is the best starting point. Private lenders — individuals, syndicates and mortgage investment corporations — come in when speed, credit or the property rule out the alternative tier.

How private lenders decide

Private lenders care most about three things: how much equity is in the property, how easily it could be sold, and how you'll repay — your exit. Most lend up to about 65% to 75% of the property's value in total, sometimes more at a higher cost. Credit and income still matter, but much less than at a bank.

What private mortgages cost

Compare private options on the total cost over the term, not just the rate. A slightly higher rate with lower fees can be cheaper overall, and the reverse is common too.

A worked example

Say you borrow $100,000 from a private lender for 12 months at 9.99%, interest-only, with a 2% lender fee. Your payment is about $833 a month, the interest over the year is about $9,990, and the lender fee is $2,000 — roughly $12,000 in total before any broker, appraisal or notary costs. That's expensive money, which is why the plan is to need it for as short a time as possible and to refinance into a lower-cost mortgage as soon as the file allows.

First or second position?

A private mortgage can be registered in first position — replacing your existing mortgage — or in second position behind it. A second-position loan keeps your current mortgage and its rate, which is often cheaper overall, but the private lender takes more risk and may charge more. A first-position private mortgage makes sense when the existing mortgage is in arrears, maturing or itself the problem. We compare both before choosing.

How private lending is regulated in Québec

Mortgage brokers who arrange private loans are regulated by the Autorité des marchés financiers (AMF), must disclose their compensation and any conflicts of interest, and must recommend products suited to your situation. The hypothec is registered by a notary, who explains the deed before you sign. If a lender or intermediary pressures you to sign quickly or won't put fees in writing, walk away.

When private lending makes sense

• A purchase deadline you'd otherwise lose, with a clear plan to refinance.
• Stopping a power of sale or clearing mortgage or tax arrears.
• Consolidating expensive debt while credit is rebuilt.
• Bridging until a sale, a bonus or a renewal.

Alternatives to consider first

• An alternative lender — trust companies and some credit unions approve many files the banks decline, at a lower cost than private money.
• A home equity line of credit from your current lender, if you can still qualify.
• Waiting for renewal, if your mortgage matures soon and the need can be bridged cheaply.
• A co-borrower or guarantor with strong credit, which can open bank options.
• Selling or downsizing, when the numbers show the debt can't be carried comfortably.

We look at each of these before recommending private financing, and explain in writing why the option we propose is the least expensive one that works.

The exit is the plan

A private mortgage should end with a refinance into a lower-cost product, a sale or a payout. That exit is built from on-time payments, cleared arrears, filed taxes and rebuilt credit. We write the steps down at the start, check in during the term and begin the refinance early enough to avoid an expensive renewal of the private loan.

Questions to ask any private lender

1. What is the total cost over the term, including every fee?
2. Can I repay early, and is there a penalty or minimum interest period?
3. What happens at maturity if I can't refinance yet — and what would a renewal cost?
4. Is the loan registered in first or second position, and what does that mean for my existing mortgage?

Signs a private lender isn't the right one

• Fees that change between the first quote and the commitment letter.
• No written disclosure of the total cost, or pressure to sign the same day.
• A term shorter than the time realistically needed to fix the underlying problem.

How Best Mortgage Montreal helps

We work with alternative and private lenders across Québec and Ontario, present the full cost in writing and match each file to the least expensive lender that will approve it. Learn more on our alternative and private financing page, compare with a second mortgage, or read our guide to getting a mortgage after a consumer proposal.