Introduction
Private lenders can be a temporary solution for homeowners or buyers who don’t qualify for traditional mortgages. However, their higher rates, shorter terms, and extra fees can quickly become a financial burden. That’s why many Canadians aim to move from a private lender to a prime (A) lender, such as a major bank, credit union, or insured lender.
In this guide, you’ll learn how to transition smoothly to an A lender mortgage in Canada—and why doing so can lead to long-term savings and peace of mind.Why Make the Switch to a Prime Lender?
Moving from a private lender to a prime lender has clear benefits:
Lower Interest Rates: Prime lenders typically offer significantly lower interest rates than private lenders. See average rates on the Bank of Canada website.
Longer Mortgage Terms: Up to 5 years or more, offering predictability.
No Renewal Fees: Unlike private lenders who may charge renewal fees.
Improved Financial Standing: A mortgage with a major bank can strengthen your credit profile.
More Lending Products: A lenders often offer products like Home Equity Lines of Credit (HELOC) and flexible prepayment options.
Are You Ready to Transition?
You might be eligible if you meet most of the following:
Credit Score of 650 or above (See how credit scores work in Canada)
Stable employment or self-employed income
T4s, pay stubs, or 2 years of Notice of Assessments (NOAs)
Manageable debt load (GDS under 39%, TDS under 44%)
At least 20% equity in the property
Step-by-Step: How to Switch from a Private to a Prime Lender
1. Review Your Current Mortgage
Understand your current mortgage’s end date, prepayment penalties, and terms. If possible, time the switch close to renewal to avoid extra fees. Learn more from CMHC’s Mortgage Basics.
2. Improve Your Financial Profile
If needed, work to:
Reduce credit card balances (keep below 30% utilization)
Clear any collections or missed payments
Avoid new debt applications
3. Gather Required Documents
A lenders want full documentation. You’ll need:
Valid ID (driver’s license or passport)
Income verification (T4s, pay stubs, NOAs)
Property appraisal (required by most A lenders)
Existing mortgage statement
Proof of property tax payments
4. Work with a Mortgage Broker
A mortgage broker like me can:
Compare rates from over 40 lenders
Structure your file to fit A lender criteria
Save you time and effort by negotiating on your behalf
📞 Call Satish Kumar at (437) 684-3333 or 📧 email at info@MortgageWithSatish.com to start your refinance plan.
5. Submit Your Application
Once your profile is ready and documents are in place, we’ll submit the mortgage to a lender best matched to your needs. We’ll walk you through the process and ensure a seamless transition.
6. Close the Deal
Upon approval, you’ll sign the new mortgage agreement. A real estate lawyer will discharge the old private mortgage and register the new one.
What to Avoid
Rushing the process: Make sure your credit and income are in good shape first.
Not comparing lenders: Each prime lender has slightly different underwriting policies.
Renewing blindly: Always explore your options before agreeing to another private term.
Real Client Snapshot
Rina and Sanjay in Scarborough refinanced out of a private mortgage after one year. With improved credit and stable self-employed income, we secured a 5-year fixed rate with a top-tier bank—cutting their monthly payments by $850.
Final Thoughts
Switching from a private to a prime lender can dramatically improve your mortgage terms and overall financial stability. Whether you’re refinancing or approaching the end of your current mortgage term, this could be the perfect time to make the move.
📞 Call Satish Kumar at (437) 684-3333 or 📧 email at info@MortgageWithSatish.com to schedule a free mortgage review.
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Disclaimer:
This blog is intended for general information purposes only and does not constitute professional mortgage or financial advice. Please consult a licensed mortgage agent for advice tailored to your situation.
