When the Bank Says No: Your B and Private Lending Options, Ranked

A “no” from your bank can feel final. It isn’t. Banks (A lenders) run on rigid rules, and plenty of good borrowers fall just outside them, whether it’s self-employed income, a bruised credit score, or a property the bank doesn’t love. When that happens, you still have options. Here they are, ranked from best fit to last resort.

Option 1: A different A lender

Before going anywhere else, it’s worth checking whether another prime lender would say yes. Banks and monoline lenders all have different appetites, and one may decline the exact file another approves. This is the first thing I check, because an A rate is always the goal.

Option 2: A B lender (alternative lenders)

B lenders specialize in borrowers who make sense but don’t fit the bank’s box, like the self-employed, newcomers to Canada, or someone rebuilding credit. Rates sit a bit higher than an A lender and there’s usually a lender fee, often around 1%, but the terms are reasonable. The plan is almost always to graduate back to an A lender in a year or two.

Option 3: A private mortgage

When timing is tight or the situation is more complex, a private lender can fund quickly and flexibly, looking mainly at the property and your equity. Rates and fees are higher, and these are short-term, interest-only solutions. Think of it as a bridge, not a destination. Used correctly, a private mortgage solves an immediate problem and buys you time to fix the underlying issue.

The key is an exit strategy

B and private lending only work when there’s a clear plan to move back up to better financing. That’s the difference between a smart detour and an expensive dead end. My job is to put you on the lowest-cost option that will actually get approved, and to map the road back to the bank.

Keep reading

Declined by Your Bank? Here’s What I’d Do NextPrivate Mortgages Explained: When They Make Sense (and How to Get Back Out)Using a Private Mortgage as a Bridge: The Exit Strategy Back to an A Lender