When an A-lender says no
There is a real market behind the banks, and it is neither shameful nor a scam — but it is the one part of residential mortgage work where you can be charged a fee, so it is worth understanding what you are buying before you sign. This page sets out the three tiers, what each costs, what Nova Scotia law entitles you to, and how a private mortgage is supposed to end.
What is a private mortgage, and when would I need one?
A mortgage funded by an individual, a mortgage investment corporation or a syndicate rather than a bank, priced on the property and the equity instead of your income and credit. It is used when a file cannot wait for, or cannot pass, standard underwriting — a recent credit event, unfiled returns, a property no A-lender will value, or a closing date too close to rebuild an approval. It should be temporary, and it should have a written exit.
The three tiers, and where your file actually sits
| A-lender | B-lender / alternative | Private | |
|---|---|---|---|
| Who | Banks, credit unions, monoline lenders | Regulated alternative lenders and trust companies | Individuals, mortgage investment corporations, syndicates |
| Underwrites on | Verified income, credit score, ratios | Income with more flexibility; bruised credit accepted | The property, the equity and the exit |
| Stress test | the greater of the contract rate plus 2% and 5.25% at federally regulated lenders | Applied, often at the contract rate plus a margin | Not applied |
| Credit score | Generally 600+ for insured lending | Lower accepted, priced accordingly | Largely irrelevant |
| Borrower fee | None on standard residential | Usually a lender fee | Lender fee and normally a broker fee |
| Typical term | 1–5 years | 1–3 years | 1–2 years, often interest-only |
| Purpose | The destination | A staging post | A bridge |
Most files that get declined by a bank belong at a B-lender, not with a private lender. The jump straight to private is usually unnecessary and always more expensive — and a broker who goes there first without testing the alternative market is not doing the job. What to do when the bank says no →
What it costs, and why no rate appears on this page
Private and alternative pricing moves with the lender, the property, the position and the file. A rate published in September and read in March is misinformation, so none is quoted here. What can be stated is the shape of the cost, and you should expect every element of it in writing before you commit:
- The interest rate, materially above A-lender pricing, and higher again on a second position than a first.
- The lender fee, normally a percentage of the advance, deducted from the funds rather than paid up front.
- The broker fee on private lending, disclosed in writing before any work begins.
- Legal fees for both sides — you typically pay the lender’s legal costs as well as your own.
- An appraisal, and on a rural or unusual Nova Scotia property sometimes a second opinion.
- Renewal or discharge fees at the end of the term.
Ask for the total cost of borrowing as a dollar figure over the full term, not just a rate. It is the only number that lets you compare a private mortgage against the alternative of not borrowing.
What Nova Scotia law entitles you to
Under the Standards of Conduct for Mortgage Brokerages Regulations, fees must be disclosed to you in writing before services are provided. Section 22 is the protection that matters most: Section 22 of the Standards of Conduct for Mortgage Brokerages Regulations: a brokerage must not charge or collect a fee from a borrower until the lender has confirmed funding in writing, the borrower has accepted the commitment in writing, and the borrower has a copy of the signed commitment
So: no fee before a written commitment exists. If anyone asks you for money on the strength of an approval you have not seen in writing, stop, and check their licence on the provincial register of brokerages and the register of brokers and associate brokers. The full disclosure explainer →
The exit is the plan
A private mortgage without an exit is just an expensive mortgage. Before the file is placed, the route back should be written down and roughly dated. The common ones in Nova Scotia:
- Credit repair. A collection, judgment or consumer proposal ages, balances come down, and the file becomes B-lender eligible — often within twelve to eighteen months if the plan is followed.
- A filed tax return. A self-employed borrower whose best year has not yet been filed becomes an A- or B-lender file as soon as it is. How self-employed income is read →
- A sale. The property is being prepared for market, or a second property is selling and will clear the debt.
- A completed renovation. The as-improved value supports a conventional refinance that the current condition does not.
- Arrears cleared. Tax or mortgage arrears are paid, removing the specific obstacle that closed the A-lender door.
If none of those applies, the honest conversation is a different one — a sale on your own terms, or a licensed insolvency trustee. Borrowing at private rates against a problem that is not going to change spends the equity that would otherwise protect you.
Nova Scotia properties and private lenders
Private lending is a bet on being able to sell the property if it comes to that, and the Nova Scotia housing stock complicates that bet in ways an Ontario lender’s template does not anticipate. Expect a lower loan-to-value, or a decline, on: seasonal and three-season properties, mini-homes on leased pads, large rural parcels where the appraiser can only value the house and limited acreage, homes in former mining areas, and properties with unresolved oil tank, well or septic issues.
The flip side is that the regional markets are diverging — Cape Breton rose +15.3% and the Highland region +14.1% in the year to August 2026, while Halifax-Dartmouth eased. An appraisal from eighteen months ago understates the equity in some parts of the province and overstates it in others. Regional prices →
Where this becomes commercial
Private lending on a building of five or more units, on land, or on a project rather than a home is commercial financing and is underwritten differently. That work goes through Indi Mortgage Commercial Division.
Questions people ask
What is the difference between an A-lender, a B-lender and a private lender?
An A-lender is a bank, credit union or monoline lender writing prime mortgages on verified income and good credit at the best rates. A B-lender is a regulated alternative lender that accepts weaker credit or non-standard income at a higher rate and usually a lender fee. A private lender is an individual, a mortgage investment corporation or a syndicate lending its own money, priced on the property and the equity rather than on your income.
Do private mortgages in Nova Scotia charge a broker fee?
They can, and this is the one part of residential brokering where a borrower fee is normal. Nova Scotia regulation requires it to be disclosed to you in writing before any services are provided, and section 22 prevents it being collected until the lender has confirmed funding in writing, you have accepted the commitment in writing and you hold a copy of it. On standard A-lender residential mortgages there is no borrower fee — the lender pays the brokerage.
How much can I borrow from a private lender?
Less than you might expect, because the lender is pricing the property rather than your income. Private residential lending is typically well inside the 80% that an A-lender refinance permits, and in Nova Scotia the limit falls further on rural properties, seasonal homes, mini-homes on leased land and anything the lender could not sell quickly.
Do I have to pass the stress test for a private mortgage?
No. The OSFI minimum qualifying rate of the greater of the contract rate plus 2% and 5.25% binds federally regulated lenders. Private lenders are not federally regulated and set their own tests, which is precisely why they can fund a file that a bank cannot. That flexibility is what you are paying the higher rate for.
How long should a private mortgage last?
One to two years, with a written exit plan from day one. A private mortgage is a bridge across a specific, temporary problem — a credit event that is ageing out, a business year that will look different on the next return, a property being prepared for sale. If there is no plausible route back to an A- or B-lender at the end of the term, the mortgage is not solving anything.
Is private lending a last resort?
Sometimes it is the only resort, and sometimes it is simply the right tool — a purchase that has to close in ten days, a property no A-lender will value, a self-employed year that will not read properly until the returns are filed. What matters is that it is temporary, that the total cost is written down before you commit, and that the exit is real rather than hoped for.
A declined application is a starting point, not a verdict
Send what the lender said. Most declines have a specific, nameable cause and a route around it — and in a good number of cases the answer is a different A-lender rather than a private one.