A Lender vs. B Lender vs. Private Mortgage in Canada (2026)

Not every mortgage comes from a bank. Canadian lending runs on a ladder — A lenders, B (alternative) lenders, and private lenders — each with different rules, rates, and reasons to exist. Knowing where you fit, and how to climb back up, can save you thousands. See all mortgage options.

The short answer

A lenders (banks and monolines) offer the lowest rates but the strictest qualifying — solid credit, provable income, and a passed stress test. B lenders serve borrowers who don't quite fit, charging a bit more plus roughly a 1% fee for flexibility on income and credit. Private lenders are the last rung: equity-based, fastest, most expensive, and short-term. The goal is always to qualify at the highest rung you can.

A lenders — the banks and monolines

A lenders are the big banks, credit unions, and monoline lenders that fund most Canadian mortgages. They offer the best rates because they take the least risk: they want good credit (typically 680+), income you can document, and a clean application that passes the mortgage stress test. If you qualify here, you should be here. Check what you'd actually be approved for with a pre-approval.

B lenders — the alternative tier

B lenders (often trust companies and alternative arms of larger institutions) exist for good borrowers who fall outside bank rules — the self-employed whose tax returns understate income, newcomers building Canadian credit, or someone with a credit blemish that's healing. Expect:

• Rates a step above bank pricing, plus a lender fee around 1%.
• More flexible income review— bank statements, stated income, or a sensible story (bank-statement mortgages).
• Common terms of one to two years, with the plan to graduate back to an A lender.

Private lenders — the equity tier

Private lenders (individuals and Mortgage Investment Corporations) lend on equity, not credit or income. They're the fastest and most flexible, and the most expensive — higher rates plus fees, usually a one-year interest-only term. Private money is for short, specific jobs: stopping a power of sale, clearing a tax lien, or bridging a few months until a refinance is possible. Read how private mortgages work.

How to climb back up the ladder

Being on the B or private rung isn't permanent — for most people it's a 12-to-24-month detour. The path up looks like this:

• Private to B: clear the urgent problem (arrears, lien), stabilise income, and refinance into an alternative lender.
• B to A: rebuild credit, season two years of clean payments, and document income — then move to bank pricing (rebuilding credit for a mortgage).

A good broker plans the climb from day one, so every step has an exit.

Which lender is right for you?

It comes down to honesty about your file. If your credit and income are strong, insist on an A lender. If you're close but not quite, a B lender buys you time at a reasonable cost. If you're in a time-sensitive bind with equity to protect, private financing is a tool — used briefly. The wrong move is paying private rates when you'd qualify for B, or forcing a bank application that gets declined and dings your credit.

Frequently asked questions

Is a B lender bad?

No — B lenders are legitimate, regulated, and often the smart choice for self-employed or credit-rebuilding borrowers. They cost a little more, but they get good people financed who don't fit rigid bank rules, with a clear path back to A pricing.

What credit score do you need for an A lender in Canada?

Most A lenders want at least 680 for the best pricing, though some approve from the low 600s with strong income and down payment. Below that, a B or private lender is usually the realistic route. See credit score requirements.

How much more does a B lender cost?

Typically a rate premium over bank pricing plus a one-time lender fee of about 1% of the mortgage. On most files the extra cost is modest compared with the alternative of not getting approved at all.

Can I switch from a B lender to a bank later?

Yes — that's the plan. After a year or two of clean payments and stronger documentation, most B borrowers refinance into an A lender at much better rates.

Not sure which rung you're on? We work with A, B, and private lenders and will place you at the best one you genuinely qualify for — with a plan to move up. Start here or read about broker vs. bank.