Most private mortgages are arranged honestly by professionals. But borrowers who need money quickly are attractive targets for people who aren’t. Knowing the warning signs, and a few simple checks, can save you from an expensive or even dangerous deal.
Red flags
Large fees before you’re approved
An appraisal is normally paid up front. Large “application” or “processing” fees demanded before you have a written approval are a warning sign.
Pressure to sign quickly
Deadlines are real, but anyone who discourages you from reading the documents or getting legal advice is putting their interests ahead of yours.
No lawyer, or their lawyer only
In Alberta, a lawyer should prepare, explain and register your mortgage. You should have your own lawyer, not one chosen by the lender.
Fees that aren’t in writing
Every fee, including lender, broker, legal, renewal and penalties, should be listed clearly in writing before you commit. See private mortgage fees explained.
Being asked to transfer your title
A mortgage is registered against your property. You should never be asked to transfer ownership of your home to a lender or “investor” as part of a loan. That’s a serious warning sign.
Blank or incomplete documents
Never sign anything with blanks to be “filled in later.”
Terms that change at the last minute
Small adjustments happen, but a big change in rate, fees or amount right before signing deserves a pause and a question.
Promises that sound too good
“Guaranteed approval,” a rate far below everyone else’s, or no questions asked about the property are reasons for caution.
The person isn’t licensed
In Alberta, people who arrange mortgages for others generally need to be licensed by the Real Estate Council of Alberta (RECA). You can check a licence on RECA’s website.
Simple checks that protect you
- Confirm the broker’s licence with RECA.
- Get every number in writing: amount, rate, payment, fees, term and penalties.
- Ask for the total cost over the full term.
- Have your own lawyer review everything before you sign.
- Understand default terms: what happens if you miss a payment.
- Take a night to think, if your timeline allows it.
If something feels wrong
Stop and get a second opinion. A reputable broker will happily explain an offer, even one they didn’t arrange. Learn more about why working with a licensed broker helps.
This article is general information, not financial or legal advice. Lender requirements, rates and fees change and depend on your situation.