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.

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.

If needed, work to:

• Reduce credit card balances (keep below 30% utilization)

• Clear any collections or missed payments

• Avoid new debt applications

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

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

• 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.