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Browne Mortgage Team
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Date Posted:
February 10, 2026
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Not every mortgage situation fits into a bank’s approval criteria. Mission homeowners and buyers who’ve been declined by conventional lenders still have options. Private mortgages and second mortgages serve as financial tools for situations where traditional lending can’t or won’t help – short-term solutions that bridge you to a better position.
Understanding Private Mortgages
Private mortgages come from individual investors or mortgage investment corporations (MICs) rather than banks or credit unions. These lenders evaluate deals primarily on property equity rather than borrower qualifications.
Where a bank might decline you because of income documentation, credit history, or property type, a private lender asks a simpler question: is there enough equity in the property to secure the loan? If the loan-to-value ratio works, the deal can proceed.
This flexibility comes at a cost. Private mortgage rates typically range from 7% to 12%, with lender fees of 1% to 3% of the loan amount. These are significantly higher than conventional rates, which is why private mortgages work best as short-term solutions rather than long-term financing.
When Private Lending Makes Sense
Bridge Financing
You’ve sold your Mission home and bought another, but the closing dates don’t align perfectly. Bridge financing through a private lender covers the gap, ensuring you don’t lose the new purchase while waiting for funds from the sale.
Credit Recovery
If credit challenges have put conventional lending out of reach temporarily, a private mortgage lets you buy now while rebuilding your credit. The plan: purchase with private financing, improve your credit score over 12 to 24 months, then refinance to a conventional mortgage at better terms.
Unconventional Properties
Mission has its share of properties that don’t fit standard lending criteria. Homes on large acreages in Stave Falls or Dewdney, properties with multiple outbuildings, older homes needing significant renovation, or manufactured homes on leased land may have limited conventional lender options. Private lenders evaluate the property’s equity value and potential rather than checking boxes on standardized criteria.
Self-Employment Income Gaps
Self-employed borrowers whose tax returns don’t reflect actual earnings sometimes turn to private lending as a stepping stone. Buy the property now with private financing, file one or two years of tax returns showing stronger income, then refinance conventionally.
How Second Mortgages Work
A second mortgage sits behind your existing first mortgage. If you have a favourable rate on your first mortgage and don’t want to break it (avoiding potentially large penalties), a second mortgage lets you access equity without disturbing the primary loan.
Second mortgage rates are higher than first mortgages because the lender’s security position is subordinate. If the property is sold in a default situation, the first mortgage gets paid first. This increased risk is reflected in rates and fees.
Common uses for second mortgages in Mission include funding home renovations, consolidating high-interest debt, covering business expenses, or providing a down payment for a second property.
The Cost Structure
Private and second mortgage costs include several components:
Interest rates: Typically 7% to 12% for first-position private mortgages, 9% to 15% for second mortgages. Rates depend on loan-to-value ratio, property type, and borrower circumstances.
Lender fees: Usually 1% to 3% of the loan amount, deducted from the advance. On a $100,000 private mortgage, expect $1,000 to $3,000 in fees.
Legal fees: Both you and the lender need legal representation. Budget $1,500 to $2,500 for combined legal costs.
Appraisal: The lender requires an independent appraisal to confirm property value, typically $300 to $500.
These costs add up. A $100,000 private second mortgage at 10% with a 2% lender fee costs roughly $12,000 in the first year. This makes the exit strategy – your plan to move to conventional financing – critical.
Property Considerations in Mission
Mission’s diverse property types create both opportunities and considerations for private lending.
Standard residential properties in Cedar Valley, downtown Mission, or established Hatzic neighbourhoods typically appraise straightforwardly and attract private lender interest at reasonable terms.
Properties on larger lots with agricultural zoning, homes in Stave Falls or Dewdney with well and septic systems, or older homes with deferred maintenance may require specialized appraisal and limit the pool of willing private lenders. Working with a broker who has relationships with lenders experienced in Mission’s property types helps match the right lender to the right property.
The Exit Strategy Is Everything
Private mortgages are temporary solutions. Entering one without a clear plan for transitioning to conventional financing is the biggest mistake borrowers make.
Before committing, map out your exit:
Credit rebuilding: If credit is the issue, what specific steps will you take over the next 12 to 24 months to improve your score? Secured credit cards, consistent bill payments, and reducing utilization all contribute.
Income documentation: If income verification is the barrier, when will you have two years of tax returns showing sufficient qualifying income?
Property improvement: If the property itself limits lender options, what repairs or upgrades will make it eligible for conventional financing?
Your broker should help you build this plan before you sign the private mortgage, not after.
B-Lenders: The Middle Ground
Before jumping to private lending, explore B-lender options. These regulated alternative lenders serve borrowers between prime and private, offering rates of 5% to 8% with more flexible qualification than banks but more structure than private lenders.
B-lenders typically accept credit scores from 500 to 650, recent credit events, non-traditional income verification, and higher debt ratios than prime lenders allow. If you qualify, B-lending is almost always preferable to private due to lower costs.
Working With a Broker for Private Financing
A mortgage broker with private lending relationships can identify the most competitive terms for your situation. They know which private lenders are comfortable with Mission property types, which offer the best rates for different scenarios, and how to structure the application for approval.
Brokers may charge a fee for arranging private mortgages, typically 1% to 2% of the loan. This fee should be disclosed upfront before you commit to proceeding.
For guidance on private and second mortgage options in Mission, contact our team at 604-820-5626. We’ll help you understand whether private financing makes sense and build a clear path to conventional lending.
