A, B & Private Lending in Ontario
Most people don’t discover the lending tiers until a bank says no. That’s the wrong moment to learn them, because it’s the moment they feel like a verdict rather than a redirection.
A bank decline usually means the file didn’t fit their box — not that you don’t qualify. There are three tiers of lender in Ontario, each asking a different question about the same borrower. This centre explains all three, honestly, including what they cost.
The three tiers, in one table
| Tier | The question they ask | Cost |
|---|---|---|
| A — banks & monolines | Does this file fit our guidelines? | Lowest |
| B — alternative lenders | Does the income and the story hold together? | A premium on top |
| Private — MICs & individuals | Does the property and the exit make sense? | Highest, and short term |
Read that downward, not across. Each tier isn’t a worse version of the one above — it’s a different way of looking at the same borrower.
The answers in this centre
- The bank declined me. What does that actually mean?
- What’s the difference between a MIC and a private individual lender?
- What happens if I can’t make the payments on a private mortgage?
- What is a MIC or B lender, and how is it different from a bank?
- How do I get from a private mortgage back to a bank?
- What interest rate do private and second mortgages charge?
More answers in this centre are being added — total costs and fees, and how a third mortgage works.
The part that matters most: the exit
A private mortgage is a one or two year arrangement, not a destination. The point of it is to buy time to fix the thing that caused the problem — a credit issue, an income documentation issue, a temporary disruption — and then move up a tier.
Private to B. B to A. The plan gets made before the mortgage is placed, not at the end of it. If nobody has walked you through what has to change and by when, you haven’t been given a plan — you’ve been given a loan.
When the answer is no, even though the equity is there
Having enough equity to obtain a mortgage does not automatically mean that taking the mortgage is the right decision.
I’ve turned down files where the equity was sufficient and the deal was technically doable. The reason is usually the same: the borrowing was going to cover an ongoing monthly shortfall, and nothing in the household budget was going to change. No expected rise in income, no upcoming sale, no renewal strategy — and so no realistic way of repaying it at the end of the term.
In that situation a private mortgage buys temporary breathing room, and it adds interest, lender fees, brokerage costs and legal expenses while using up more of the equity the family has left.
Sometimes saying no protects more of a client’s future than arranging an approval would.
Where that’s the case I’ll say so, and point you toward independent advice on the budget and the overall debt position first. More on how I work →
What to do next
If a bank has declined you, or you’re being offered a private mortgage and want a straight read on whether it’s the right tier, send me the details.
I’ll tell you which tier your file actually fits — including if the honest answer is that you should wait.
Talk it through → · Back to all answers →
General information about Ontario mortgages — not financial, legal or mortgage advice. Lender types, guidelines and terms vary. Every file is reviewed individually.