Three tiers, and why they exist
Canadian mortgage lending sorts roughly into three tiers. Most people only ever meet the first one.
- A lenders — the big banks, the monolines, most of the market. The best pricing, and the tightest written guidelines.
- Alternative or B lenders — including trust companies and credit unions. They lend on the same properties but read income and credit with more flexibility, and price for the extra work.
- Private lenders — mortgage investment corporations and individual investors. They lend against the property first and the borrower second, for defined periods, at private pricing.
The useful thing to understand is that these tiers are not a ranking of borrowers. They are a consequence of how each lender is regulated.
Who the stress test actually binds
OSFI's Guideline B-20 — the source of the stress test — is addressed to federally regulated financial institutions: banks, foreign bank branches, life insurers, property and casualty insurers, and trust and loan companies (OSFI). For uninsured mortgages it sets the qualifying rate at the greater of your contract rate plus two percentage points, or the five-year benchmark rate.
Read that scope carefully, because it explains the whole tier structure. A BC credit union is provincially regulated, not federally regulated, so B-20 does not bind it the way it binds a bank — though in practice most apply a qualifying standard of their own. A mortgage investment corporation or a private lender sits outside it entirely.
So when a file works at one lender and not another, the usual explanation isn't the strength of the borrower. It's that two lenders are working from two different rulebooks. Finding the one whose rulebook fits is the entire exercise, and it's why having 50+ lenders on the panel matters more here than anywhere else.
What actually sends a file to the alternative tier
In my experience the reasons are mundane, and most of them are temporary.
- Income the A-lender template doesn't read well. A business in its second year. Commission or contract income with a short history. Someone who incorporated recently and is drawing modestly on purpose. There's more on this on the self-employed page.
- A property the guidelines cap. Acreage above a certain size, a working farm or vineyard, a property on a well and septic, a non-winterised recreational property, or a home with an unusual zoning.
- A timeline that doesn't fit. A firm closing date, a property bought before the existing one sells, or an estate or separation that has to settle on a date somebody else set.
- A credit file that's improving but recent. A consumer proposal discharged last year, a period of missed payments during an illness or a business downturn. Time is genuinely the cure here — and alternative lending is often how people carry a mortgage while that time passes.
Costs — the part that has to be said plainly
On conventional mortgages there is no cost to you for my work. That is not true across this tier, and I'd rather you hear it from me now than at the lawyer's office. Alternative and private deals carry costs that an A-lender deal generally doesn't:
- A lender fee, typically deducted from the advance.
- A broker fee on private files, disclosed to you in writing before you commit to anything.
- Appraisal and legal costs, and on private deals often the lender's legal costs as well.
- A higher rate than an A lender would offer.
British Columbia requires me to give you a conflict of interest disclosure — Form 10 — setting out any direct or indirect interest I or a related party have in the transaction (BCFSA). You'll get the full cost picture in writing, in numbers, before you're committed. If the total doesn't justify what the mortgage achieves, my advice will be to not do it.
The exit is the point
This is the part people miss, and it's the part I care most about.
Alternative and private financing is a bridge, not a destination. Private terms in particular are usually written short — often a year — precisely because they're meant to solve something specific and then end. A private mortgage without a plan for what replaces it is the one version of this that genuinely goes wrong.
So before I place a file here, we agree what the exit looks like and what has to be true for it to happen. Usually it's one of:
- Time. Enough months of clean payment history, or enough self-employment history, to meet an A or B lender's written guideline.
- A second year of tax returns that shows the business the way it actually is.
- The sale of the property the purchase was bridging.
- Completion — a build finishing and moving to standard financing, covered on the construction page.
I put a review date in the calendar at the start, not at maturity. Starting the refinance conversation with three months to run gives you options; starting with three weeks gives you whatever is in front of you.
How much you can borrow
The ceiling is lower here. Borrowing against home equity generally tops out at 80% of the property's value (FCAC), and across the alternative and private tier lenders commonly want more room than that — meaning more equity in the property, not less. Default insurance isn't available on an equity take-out, so the lender's protection is the equity itself.
The practical consequence: this tier tends to work well for someone with real equity and a temporary income or timing problem, and works poorly for someone stretching on a thin down payment. If you're in the second group, an A or B lender with the right guideline is almost always the better answer, and that's where I'd take it.
What I need to look at it
The property address, a rough sense of the value and what's owed on it, your income documents such as they are, and — most usefully — what you're trying to achieve and by when. From there I can tell you which tier the file genuinely belongs in, what it would cost, and what the exit would look like.
Quite often that conversation ends with me saying the file fits an A lender after all, and that it's worth trying there first. That's a good outcome, and it costs nothing to find out. There's no credit check to talk it through.
Alternative lending in the Okanagan
Two things bring more Okanagan files into this tier than you'd expect from the population, and neither is about the borrower.
The property types
The valley is full of properties an A lender's guideline caps: acreage toward East Kelowna, Lake Country and the north Okanagan; working orchards and vineyards, where at some point a lender stops treating it as a home with land and starts treating it as a commercial file; recreational and second properties around the lakes that aren't winterised or year-round accessible; and leasehold land in West Kelowna, including on Westbank First Nation land, where the list of willing lenders is shorter to begin with. None of these are problems with the buyer. They're properties that need a lender whose guideline accommodates them.
The income shapes
Tourism, hospitality, construction trades that run flat out from spring to October, orchard and vineyard operations, and a large self-employed population — the local economy produces a lot of strong income in shapes the standard template reads awkwardly. A B lender that averages seasonal income properly is frequently the whole solution, with no private lending involved at all.
Equity is usually the thing that makes it work
In July 2026 the Central Okanagan single-family benchmark sat at $1,072,400, up 2.3% year over year, with townhomes at $709,500 and condominiums at $490,700 (Association of Interior REALTORS). Long-held Okanagan property often carries substantial equity, and equity is exactly what this tier lends against. Someone who bought years ago and is having a difficult income year is usually in a far stronger position than they assume — the equity does the work while the income recovers, and then the file moves back to an A lender.