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How to Get a Private Mortgage in Edmonton in 2025: A Complete Guide
If you’re looking to buy a home or refinance in Edmonton but don’t qualify for a traditional mortgage, a private mortgage could be the solution. In 2025, private lending is becoming an increasingly popular option for those who are self-employed, have bad credit, or need faster approvals. This guide will cover everything you need to know about private mortgages in Edmonton, including their benefits, drawbacks, eligibility requirements, and FAQs.
What is a Private Mortgage?
A private mortgage is a home loan funded by an individual lender, a mortgage investment corporation (MIC), or a private lending institution rather than a traditional bank or credit union. These loans are typically used when borrowers do not meet the strict qualification criteria set by major financial institutions.
Who Uses Private Mortgages?
Self-employed individuals with fluctuating income
Borrowers with poor credit scores
Investors looking to finance unconventional properties
People with high debt loads
Those needing fast funding and can’t wait for bank approvals
How to Get a Private Mortgage in Edmonton
Getting a private mortgage in Edmonton involves the following steps:
Assess Your Needs – Determine why you need a private mortgage and how much you need to borrow.
Research Private Lenders – Contact mortgage brokers, private lenders, and financial institutions that offer private mortgages.
Compare Loan Terms – Look at interest rates, repayment terms, fees, and loan conditions from multiple lenders.
Gather Documentation – Be prepared with property details, proof of income (if required), bank statements, and your exit strategy.
Apply for the Loan – Submit an application and wait for approval, which can take a few days to two weeks.
Get a Legal Review – Have a lawyer review the mortgage agreement before signing to ensure fair terms.
Secure Your Mortgage – Once approved, complete the necessary paperwork and receive your funds.
How to Qualify for a Private Mortgage in Edmonton
Private lenders have more flexible requirements compared to traditional banks. However, they still assess a few key factors before approving a loan:
1. Property Value & Equity
Private lenders focus on the Loan-to-Value (LTV) ratio. The lower the LTV, the better your chances of approval. Most private lenders in Edmonton prefer an LTV of 75% or lower, meaning they will lend up to 75% of the home’s value.
2. Credit Score & Income
Unlike banks, private lenders are more lenient with low credit scores. However, a better credit score may secure a lower interest rate. While proof of income is not always required, lenders may ask for bank statements or other financial documents.
3. Ability to Make Payments
Private lenders want assurance that you can afford the mortgage payments. This is evaluated through:
Rental income (if applicable)
Business revenue (for self-employed individuals)
Bank statements showing cash flow
4. Exit Strategy
Private mortgages are usually short-term (1 to 3 years). Lenders want to know how you plan to repay the loan—whether through refinancing, selling the property, or improving your credit to qualify for a traditional mortgage.
Pros and Cons of a Private Mortgage
Pros:
✅ Easier Approval – Private lenders focus more on the property’s value and equity than credit score or income. ✅ Faster Processing – Private mortgages can be approved and funded within days, unlike banks that take weeks. ✅ Flexible Terms – Lenders can offer customized repayment terms based on your needs. ✅ No Stress Test – Unlike traditional mortgages, private lenders don’t require borrowers to pass a stress test. ✅ Great for Unique Properties – Private lenders finance properties that banks may consider unconventional (e.g., rural homes, mixed-use properties).
Cons:
❌ Higher Interest Rates – Interest rates for private mortgages range from 6% to 15%, significantly higher than traditional mortgages. ❌ Shorter Loan Terms – Most private mortgages last 1 to 3 years, requiring borrowers to refinance or pay off the balance quickly. ❌ Additional Fees – Expect lender fees, broker fees, and legal costs, which can add up. ❌ Risk of Foreclosure – If you fail to make payments, private lenders can take legal action quickly.
Where to Find Private Mortgage Lenders in Edmonton
If you’re looking for private lenders, here are a few ways to find them:
Mortgage Brokers – Brokers have access to multiple private lenders and can help find the best rates.
Real Estate Investment Networks – Some investors offer private mortgage loans.
Online Private Lenders – Many lenders advertise their services online.
Local Real Estate Attorneys – Lawyers specializing in real estate often have contacts with private lenders.
FAQ: Private Mortgages in Edmonton
1. How long does it take to get a private mortgage?
Private mortgage approvals can take anywhere from a few days to two weeks, much faster than traditional mortgages.
2. Can I refinance my private mortgage with a bank later?
Yes, many borrowers use private mortgages as a short-term solution and refinance with a traditional lender once their credit improves.
3. What is the minimum down payment required for a private mortgage?
Most private lenders require at least 20-25% down for new home purchases or equivalent home equity for refinancing.
4. Are private mortgages only for bad credit borrowers?
No, private mortgages are also used by self-employed individuals, investors, and those needing quick funding.
5. Do private mortgage lenders report to credit bureaus?
Most private lenders do not report to credit bureaus, so your mortgage won’t directly impact your credit score.
6. Can I get a second mortgage from a private lender?
Yes, private lenders often provide second mortgages for homeowners who need additional financing.
7. What happens if I can’t pay my private mortgage?
If you default, the lender may initiate foreclosure proceedings to recover their funds. Some lenders may offer refinancing options if you communicate early.
8. Can I negotiate private mortgage terms?
Yes, terms such as interest rates, fees, and payment schedules can sometimes be negotiated depending on the lender.
9. Can I use a private mortgage for investment properties?
Yes, private mortgages are commonly used for investment properties, including rental homes, multi-unit buildings, and commercial properties.
10. What fees should I expect with a private mortgage?
Expect to pay lender fees (1-5% of the loan amount), broker fees, legal fees, and possibly appraisal fees.
Final Thoughts: Is a Private Mortgage Right for You?
A private mortgage can be a great option if you need quick financing, have unique financial circumstances, or are unable to qualify for a traditional mortgage. However, due to the higher interest rates and shorter terms, it’s crucial to have a solid exit strategy in place.
If you’re considering a private mortgage in Edmonton in 2025, work with an experienced mortgage broker to find the best lender and terms for your situation. Always review the loan agreement carefully and ensure you have a plan to transition into a more affordable long-term solution.
By understanding the ins and outs of private mortgages, you can make an informed decision and secure the financing you need for your real estate goals in Edmonton.
Check out some of our other articles about getting a private mortgage in Edmonton!
Private Lending – Lendramp.com Lowest Mortgage Rates in Canada
How To Get A Private Mortgage In Canada, When banks Decline You
Private Lender Mortgage Hub | Shop over 50 Private Lenders Here
Private Mortgages VS “B” Lenders. What’s the Real Difference?
Who Is The Best Private Mortgage Lender In Edmonton? – Lendramp.com Lowest Mortgage Rates in Canada
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Sean Rampersaud
Sean has been a mortgage broker in Canada for 17 years.
We have helped countless amounts of clients achieve their mortgage goals!
Call me anytime at 780-278-4847