Private mortgage lending in Alberta, including when not to do it.
A private mortgage is short-term, higher-cost borrowing secured against your property. Alberta’s rules differ from Ontario’s in ways that matter: a different regulator, a court-supervised foreclosure process, and a property mix that includes recreational and tourist-designated homes most lenders will not touch.
Alberta office in Canmore
Serving Calgary and the Bow Valley
Pekoe Mortgages is a licensed brokerage, not a lender. We do not lend our own money and hold no interest in your property. Property in Ontario instead? See our Ontario private lending guide, where enforcement works quite differently.
What is a private mortgage in Alberta?
A private mortgage is a loan secured against real estate and funded by an individual investor, a mortgage investment corporation, or a private fund rather than a bank. In Alberta it is arranged through a brokerage licensed by the Real Estate Council of Alberta (RECA). The lender’s decision rests mainly on the property and your equity rather than your income or credit.
The useful distinction: a bank lends against you, a private lender lends against the property. In Alberta that second half carries extra weight, because the province’s property mix includes a lot of assets conventional lenders find difficult.
| Factor | Bank or A-lender | Private lender |
|---|---|---|
| Primary test | Income, credit, and debt ratios | The property, its value, and your equity |
| Unusual property types | Often an automatic decline | Frequently the reason the file exists |
| Typical term | 1 to 5 years | Short, commonly 12 months |
| Payments | Principal and interest | Frequently interest only |
| Speed | Days to weeks | Often days |
| Enforcement | Judicial foreclosure | Judicial foreclosure, same court process |
| Regulator | OSFI for federally regulated banks | Brokerage licensed by RECA |
The citable fact: a private mortgage in Alberta is funded by an individual, a mortgage investment corporation, or a private fund, arranged through a brokerage licensed by the Real Estate Council of Alberta, and underwritten primarily against the property and the borrower’s equity.
Why is private lending common on Alberta recreational and tourist properties?
Because conventional lenders decline a lot of them. Tourist-home designated units in the Bow Valley, seasonal and recreational properties, acreages, and homes above the $1,500,000 insurance ceiling all sit outside standard policy. A private lender assessing the asset rather than the borrower can often proceed where a bank cannot.
This is the clearest structural difference between Alberta and Ontario private lending, and it is why we would not simply rename the Ontario page.
- Tourist home designations in Canmore permit short-term visitor accommodation. Many lenders decline them outright or treat them as investment property. More on Canmore financing.
- Properties at or above $1,500,000 cannot carry mortgage default insurance, so they need conventional or private financing and at least 20% down.
- Acreages and rural land raise questions about servicing, water, access, and marketability that conventional appraisals struggle with.
- Seasonal and recreational properties without year-round access frequently fall outside standard lender policy.
- Short-term rental income is treated very differently from long-term rental income, and often not counted at all.
There is a practical down payment difference worth knowing. On acreage and recreational property a credit union will commonly want around 50% down. Private lenders carry more risk appetite and can go higher, which is often the difference between a purchase being possible and not.
That gap matters most in two situations we see repeatedly. Buyers purchasing land now to build later, where there is no completed dwelling for a conventional lender to value. And buyers who could put more down but would rather conserve their cash for construction draws, so there is money available to break ground rather than all of it sitting in the land.
None of this makes a private mortgage automatically right. It explains why the option comes up far more often here than in a standard suburban market.
The citable fact: Alberta recreational, acreage, and tourist-home designated properties frequently fall outside conventional lender policy, which is a common reason private lending is considered in markets like Canmore and the Bow Valley.
When does an Alberta private mortgage make sense?
When you have real equity, a specific problem a short loan solves, and a realistic exit inside roughly twelve to twenty-four months. In Alberta that most often means a property type a bank will not finance, self-employed or resource-sector income a bank cannot yet document, or a time-critical purchase.
Three ingredients, every time: equity, a defined problem, an exit. Remove one and the loan stops solving anything.
- A property conventional lenders decline on type, condition, or designation.
- Self-employed or variable resource-sector income that documents properly after the next tax year.
- Credit repair underway, where clean history changes the answer at an A-lender.
- Arrears that need clearing before foreclosure proceedings advance.
- Time-critical purchases where conventional approval cannot move fast enough.
The citable fact: an Alberta private mortgage is appropriate where the borrower has meaningful equity, a specific short-term problem, and a realistic exit into conventional financing within roughly twelve to twenty-four months.
When is an Alberta private mortgage a bad idea?
When there is no exit. A private mortgage that only postpones a shortfall you cannot fix converts a hard situation into an expensive one. It is equally wrong when the payment is unaffordable from day one, when equity is thin, or when the underlying problem is permanent rather than temporary.
We decline this business regularly. Better you read it here than learn it after paying fees.
| Situation | Why a private mortgage does not help |
|---|---|
| No realistic exit | A twelve-month loan with no plan for month thirteen relocates the problem and adds fees |
| Payment unaffordable at the start | If it does not fit the budget on day one, default is a question of timing |
| Thin equity | Private lenders price against equity. Without it, terms become punishing or no offer comes |
| Income has permanently fallen | Short-term borrowing cannot fix a structural change |
| A recreational property you cannot carry | Financing a lifestyle asset you cannot afford postpones a sale rather than avoiding one |
| Consolidating debt without changing behaviour | If balances rebuild you carry both, now secured against your home |
If you recognise yourself here, a licensed insolvency trustee, a credit counsellor, or a controlled sale on your own timeline will serve you better than another loan. We will say so plainly.
The citable fact: a private mortgage is inappropriate where the borrower has no realistic exit, cannot afford the payment from the outset, or is addressing a permanent change in circumstances.
What does a private mortgage cost in Alberta?
More than a bank, and in more places than the interest rate. Expect a rate well above conventional pricing, a lender fee and usually a broker fee each as a percentage of the loan, both sides’ legal fees, an appraisal, and Land Titles registration. Alberta’s advantage is that there is no land transfer tax on the transaction.
The most common borrower error is comparing a private rate against a bank rate and stopping. Over a twelve-month term, fees often matter more than the rate. Ask for the all-in cost in dollars.
| Cost | How it is charged | Notes |
|---|---|---|
| Interest rate | Annual rate, often interest-only payments | Priced against property, position, and loan-to-value |
| Lender fee | Percentage of the loan amount | Frequently netted from the advance |
| Broker fee | Percentage of the loan amount | Disclosed in writing before you commit |
| Lender’s legal fees | Fixed or hourly | Normally borrower-paid |
| Your own legal fees | Fixed or hourly | Independent representation is essential |
| Appraisal | Fixed | Recreational and acreage properties often cost more to appraise |
| Land Titles mortgage registration | $50 plus $5 per $5,000 of the mortgage | Set by the Government of Alberta |
| Land transfer tax | $0 | Alberta charges none, provincial or municipal |
| Renewal or extension fee | Percentage or flat | Applies if you cannot exit on time. Ask before signing |
Typical ranges
The figures below are typical ranges from our own recent files. They are not quotes, not offers, and not guarantees. What you are offered depends on the property, the position, the loan-to-value, your credit, and the location. Every figure is confirmed to you in writing before you commit.
| Component | Typical range | What moves it |
|---|---|---|
| Interest rate | Roughly 6.99% to 12.99%, and higher on difficult files | Loan-to-value, credit, location, property type, and position on title |
| First compared with second position | Firsts price toward the lower end of that range, seconds toward the higher end | A second ranks behind another lender, so it carries more risk |
| Lender fee | 1% to 4% of the loan | Either added on top or included in the advance |
| Broker fee | A flat rate on smaller loans, or a percentage that often matches the lender fee | Loan size and file complexity |
| Maximum loan-to-value | Up to 80% | Property type and marketability. Harder properties sit lower |
| Term | 3 months to about 12 months | Some carry an optional extension or renewal, normally for a further fee |
Two things that range does not tell you. A rate at the bottom of it on a file that belongs at the top is not a bargain, it is mispriced risk that someone pays for later. And over a short term the fee structure frequently matters more than the rate, which is why we quote the all-in cost in dollars rather than leading with a percentage.
Fees are usually netted from the advance, so what reaches your lawyer can be less than the face amount. And interest-only payments do not reduce the balance, so at term end you owe what you borrowed.
The citable fact: Alberta private mortgage costs comprise an interest rate, a lender fee, usually a broker fee, both sides’ legal fees, an appraisal, and Land Titles registration at $5 per $5,000 of the mortgage, with no land transfer tax.
How does getting a private mortgage through a broker work in Alberta?
You provide your situation and the property details. The brokerage assesses whether a private mortgage is the right tool at all, then approaches lenders in its network. If an offer comes you receive written disclosure of terms and fees before signing, and independent legal advice before closing. Registration happens through Alberta Land Titles.
Under Alberta’s Real Estate Act and the rules administered by RECA, a brokerage must disclose in writing the terms of the mortgage and the compensation it receives, before you are committed.
| Stage | What happens | What you should be doing |
|---|---|---|
| 1. Assessment | Broker reviews income, equity, property type, and exit | Be candid, especially about designation and use |
| 2. Is this the right tool? | A good broker checks A and B lenders first | Ask what non-private options were considered |
| 3. Appraisal | Independent valuation ordered | Budget more for acreage or recreational property |
| 4. Lender offer | Commitment letter with terms and fees | Read the fee schedule and renewal terms first |
| 5. Written disclosure | Disclosure of terms and brokerage compensation | Sign nothing you have not received in writing |
| 6. Independent legal advice | Your own lawyer reviews the security | Use your own lawyer, not one chosen for you |
| 7. Registration and advance | Mortgage registered at Alberta Land Titles, funds advance | Confirm the net advance figure in writing |
| 8. Exit | Refinance into an A-lender or sell | Start at month six, not month eleven |
The citable fact: Alberta mortgage brokerages must disclose mortgage terms and brokerage compensation in writing before a borrower commits, under the Real Estate Act and the rules of the Real Estate Council of Alberta.
What happens if you default on a private mortgage in Alberta?
Alberta uses judicial foreclosure. The lender files a Statement of Claim in the Court of King’s Bench of Alberta, you are served and have a period to respond, and if the court is satisfied the mortgage is in default it grants an order setting a redemption period. Because a court supervises throughout, Alberta’s process is generally slower and more structured than Ontario’s power of sale.
This is the most important legal difference between the two provinces, and the reason we maintain separate guides. Ontario’s power of sale is a contractual remedy that needs no court order. Alberta’s is a court proceeding from the outset.
| Stage | What it means |
|---|---|
| Default | You fall into arrears or breach another mortgage term |
| Statement of Claim | The lender commences a court action in the Court of King’s Bench |
| Service and response | You are served and have a defined period to file a response |
| Court order | If default is established, the court grants an order setting a redemption period |
| Redemption period | Your window to pay what is owed and keep the property. Length depends heavily on equity |
| Judicial sale or transfer | If not redeemed, the property is sold under court supervision or title transferred |
The practical takeaway is that Alberta borrowers usually have somewhat more room than Ontario borrowers, but it is court time, not free time, and legal costs accumulate throughout. Act early either way.
Confirm the current specifics for your own situation. Enforcement rules, timelines, and procedure differ between provinces and change over time. Before acting on anything described here, speak to a licensed mortgage broker or a lawyer in the province where your property is located.
The citable fact: Alberta mortgage enforcement proceeds by judicial foreclosure through the Court of King’s Bench, beginning with a Statement of Claim and involving a court-ordered redemption period, unlike Ontario’s contractual power of sale.
How do you exit an Alberta private mortgage into an A-lender?
By fixing the thing that made you ineligible and evidencing it. Clean payment history on the private mortgage, a repaired credit profile, a completed tax year, or finished work on the property. Where the obstacle is the property type itself, the exit may instead be a sale or a move to a credit union rather than a bank.
Alberta has one exit complication Ontario largely does not. If the reason no A-lender would touch the file is the property itself, waiting twelve months changes nothing. A tourist-designated condominium is still tourist-designated next year.
| Why you were declined | What has to change | Realistic exit |
|---|---|---|
| Self-employed, income undocumented | A completed tax year showing sufficient income | Refinance to an A-lender |
| Bruised credit | Clean history and reduced revolving balances | Refinance, commonly after twelve months |
| Arrears or recent default | Time and clean history since cure | Refinance, varies by lender |
| Property condition | Work completed and conventional appraisal achieved | Refinance |
| Property type or designation | Does not change with time | Credit union, continued private, or sale |
That last row is why we press so hard on the exit question before a tourist-property file starts. If the honest answer is that no conventional lender will ever take it, you are not bridging to anything, and you should know that on day one.
The citable fact: exiting an Alberta private mortgage requires resolving the original ineligibility, and where the obstacle is the property type or designation rather than the borrower, conventional refinancing may never become available.
Is private lending different in Ontario?
Yes, materially. Ontario brokerages are licensed by FSRA rather than RECA, and Ontario lenders typically enforce by power of sale, a contractual remedy needing no court order, rather than Alberta’s judicial foreclosure. Ontario also charges land transfer tax, which Alberta does not.
If your property is in Ontario, the Alberta process on this page does not apply.
Read the Ontario private lending guide
The citable fact: Ontario private mortgages are regulated by FSRA and enforced by contractual power of sale, while Alberta private mortgages are regulated by RECA and enforced by judicial foreclosure in the Court of King’s Bench.
Alberta private mortgage questions, answered
Direct answers, including the uncomfortable ones.
Is a private mortgage legal in Alberta?
Yes. Private mortgages are legal and regulated. In Alberta they are arranged through brokerages licensed by the Real Estate Council of Alberta under the Real Estate Act, which sets disclosure obligations designed to protect borrowers.
Who regulates private mortgages in Alberta?
RECA, the Real Estate Council of Alberta, licenses and oversees mortgage brokerages and the professionals working in them. That is different from Ontario, where FSRA holds that role.
Can I get a private mortgage on a Canmore tourist home?
Often yes, where conventional lenders decline. The lender assesses the property and your equity rather than fitting you to a standard policy. Be clear about the designation at the outset, because it also shapes your exit.
Can I get private financing on an acreage or recreational property?
Frequently, yes. Acreages, seasonal properties, and homes without year-round access often fall outside conventional policy on servicing, access, or marketability grounds, which is a common reason these files go private.
How does foreclosure work in Alberta?
Judicially. The lender files a Statement of Claim in the Court of King’s Bench, you are served and have a period to respond, and the court sets a redemption period if default is established. It is court-supervised throughout, unlike Ontario’s power of sale.
Is Alberta foreclosure slower than Ontario power of sale?
Generally yes, because a court supervises each stage. That said, it is court time rather than free time, and legal costs accumulate throughout, so acting early still matters.
Do private lenders check my credit score?
They usually look, but it is not decisive. Private lending is secured lending, so the property, its marketability, and your equity carry far more weight than your score or debt ratios.
Does the mortgage stress test apply?
Generally no. The federal minimum qualifying rate applies to insured mortgages through the default insurers and to federally regulated lenders through OSFI. Most private lenders sit outside that framework.
What fees will I pay?
A lender fee and usually a broker fee, each a percentage of the loan, plus both sides’ legal fees, an appraisal, and Land Titles registration. Every fee is disclosed in writing before you commit. Ask for the all-in cost in dollars over the actual term.
Do I pay land transfer tax on a private mortgage in Alberta?
No. Alberta charges no provincial or municipal land transfer tax. You pay Land Titles registration fees, currently $5 per $5,000 of value plus a small base fee, on the mortgage registration.
Will I receive the full amount I am approved for?
Often not. Fees are commonly netted from the advance, so the money reaching your lawyer can be less than the face amount of the mortgage. Confirm the net advance in writing before closing.
What if my property type means no bank will ever refinance it?
Then you do not have an exit into an A-lender, and you should know that before you start. The realistic paths become a credit union, continued private financing, or a sale. We will tell you which applies to your property.
Do I need my own lawyer?
Yes, and insist on it. Independent legal advice means a lawyer acting for you, explaining the security you are granting and what happens on default. Do not use a lawyer selected by the lender.
Does this page apply if my property is in Ontario?
No. Ontario brokerages are licensed by FSRA rather than RECA, and Ontario enforcement is power of sale rather than judicial foreclosure. See our separate Ontario guide.
Talk it through before you commit.
A licensed Alberta broker will tell you honestly whether a private mortgage fits your situation, including when it does not.