You can look for a private lender on your own, but most private mortgages in Alberta are arranged through mortgage brokers. Here’s what a broker actually does, how they’re paid, and how to choose a good one.
What a broker does for you
Checks the cheaper options first
A good broker looks at whether a bank, credit union or alternative lender could approve you before turning to private lenders. Many people who assume they need a private mortgage don’t. See how the lender types compare.
Finds the right private lender
Private lenders have different appetites. Some prefer cities, some lend on rural properties, some focus on second mortgages. A broker knows which lenders fit which situations.
Prepares your file
Presenting your situation clearly, with the right documents and a believable exit plan, can make the difference between a decline and a good offer.
Compares offers on total cost
A broker can put offers side by side, including the rate, every fee, prepayment terms and renewal costs, so you can see which is really cheaper.
Negotiates and manages the process
From appraisal to funding, a broker keeps the lender, appraiser and lawyers moving so deadlines are met.
Plans your exit
The best brokers think about how you’ll move to a cheaper lender from day one, and check in before your term ends. See your exit strategy.
How brokers are paid on private mortgages
On bank mortgages, brokers are usually paid by the lender. On private mortgages, there’s often a broker fee paid by the borrower, usually taken from the mortgage funds at closing. The fee should be disclosed in writing before you commit. See private mortgage fees explained.
Licensing in Alberta
Mortgage brokers and associates in Alberta are licensed by the Real Estate Council of Alberta (RECA). Licensing comes with education requirements and rules of conduct. You can check whether someone is licensed on RECA’s website.
Questions to ask a broker
- Are you licensed with RECA?
- Could a bank or alternative lender approve me instead?
- How many private lenders will you compare?
- What is your fee, and when is it paid?
- What will the total cost be over the term?
- What’s my exit plan, and when will we review it?
For quick answers to other common questions, see the private mortgage FAQ.
Talk it through
A short conversation with a licensed broker can tell you which options are realistic, and which ones to avoid.
This article is general information, not financial or legal advice. Lender requirements, rates and fees change and depend on your situation.