Getting turned down by a bank does not mean you are out of options. Private lenders in British Columbia look at your file in a very different way, and many borrowers get approved in days instead of weeks. This guide breaks down exactly what a private lender checks before saying yes, from home equity to your exit plan. You will also learn what documents to prepare and how the process moves from application to funding. By the end, you will know what to expect and how to put your best application forward with a trusted private mortgage lender in BC.
What Is a Private Mortgage Approval Process?
A private mortgage approval process is how a non-bank lender reviews your application to decide if they will lend against your property. Unlike banks, private lenders in BC focus on the value of your home rather than your credit score or income history. This is often called equity-based lending. The lender wants to know two main things: how much your property is worth, and how you plan to repay the loan. If those two answers are strong, most other issues, such as bruised credit or self-employment, can usually be worked around.
6 Things Private Lenders Review Before Approving Your Mortgage
Private lenders in BC generally review the same core factors on every file. Here is what matters most, in order of importance.
- Property Equity and Loan-to-Value (LTV) – This is the single biggest factor. LTV compares your loan amount to your home’s appraised value. The lower your LTV, the safer the loan looks to a lender.
- Your Exit Strategy – Since private mortgages are short-term, lenders want a clear plan for how you will pay off the loan when the term ends.
- Property Type and Location – Homes in Metro Vancouver, Victoria, and other in-demand markets are easier to finance than rural or unique properties.
- An Independent Appraisal – Almost every private lender orders a professional appraisal to confirm your home’s current market value.
- Basic Income and Ability to Pay – Even though income is not the main factor, lenders still want proof you can afford the monthly payments.
- Legal and Title Details – Lenders check the title for existing liens, unpaid taxes, or legal issues that could affect their security.
Below, we cover each factor in more detail so you know exactly what to prepare.
Loan-to-Value (LTV): The Most Important Number
Loan-to-value, or LTV, is the percentage of your home’s value that a lender is willing to lend. It is calculated by dividing your total loan amount by your property’s appraised value. A lower LTV means more equity is protecting the lender, which usually leads to better rates and an easier approval.
Most private lenders in BC follow LTV limits based on property type. This table gives a quick snapshot of typical ranges.
| Property Type | Typical Maximum LTV |
| Single-family homes | Up to 75% (up to 80% in some cases) |
| Townhouses | Up to 75% |
| Condos | Up to 65% (sometimes up to 75%) |
| Rural or unique properties | Usually 50–65% |
If your LTV is too high, you still have options. You can pay down existing debt, bring extra funds to closing, or ask about a smaller loan amount. A strong equity position is the fastest path to a private mortgage approval.
Your Exit Strategy Matters as Much as Your Equity
An exit strategy is your plan for repaying or refinancing a private mortgage once the term ends, usually within one to three years. Private lenders ask about this early because they are not set up for long-term lending. They want to see a realistic path forward.
Common exit strategies include selling the property, refinancing into an A or B lender once your credit or income situation improves, or paying off the balance from another source, such as an inheritance or business sale. If you are rebuilding credit after a consumer proposal or bankruptcy, a clear timeline for improvement makes your file much stronger. Our detailed guide on building a private mortgage exit strategy walks through this step by step.
Property Type, Condition, and Location
Private lenders assess your property almost the way a buyer would. They look at the neighborhood, resale demand, and how quickly the home could sell if needed. Properties in major BC cities like Vancouver, Surrey, and Kelowna typically qualify more easily than remote or rural homes.
The physical condition of the property matters too. Homes that need major repairs, have unfinished construction, or show signs of neglect may still qualify, but often at a lower LTV. Unique properties, such as leased-land homes or properties with legal suites, can also be financed, though the lender may ask more questions during underwriting.
The Appraisal: Confirming What Your Home Is Worth
An appraisal is an independent, professional report that confirms your property’s current market value. Nearly every private lender in BC orders one before finalizing an approval. It usually costs between $400 and $600, and this is often the only upfront cost you pay, since other fees are deducted from the mortgage at closing.
The appraiser compares your home to similar recent sales in the area and inspects the property’s condition. This report sets the exact LTV your loan will be based on, so an accurate, up-to-date appraisal protects both you and the lender.
Income, Credit, and Debt: Reviewed, But Not the Deciding Factor
Private lenders do check your income and credit, but not with the same strict rules banks use. There is often no minimum credit score, and past bankruptcies or consumer proposals do not automatically disqualify you. Instead of pay stubs and two years of tax returns, lenders may accept bank statements, a letter of employment, or a simple explanation of your income sources.
The federal mortgage stress test, which requires bank borrowers to qualify at a higher rate, generally does not apply to private lenders either. If you want to understand how that test affects traditional financing, our guide to the mortgage stress test in Canada explains it in plain terms. Private lenders still want to see that your monthly payment is realistic for your income, even if the paperwork is lighter.
Legal and Title Review
Before funding, a lawyer or notary reviews the property title on behalf of the lender. This step checks for existing mortgages, unpaid property taxes, judgments, or other liens registered against the home. Any of these can affect how much a private lender is willing to advance, since they reduce the equity available as security.
If you already have a first mortgage, a private lender can still register a second mortgage behind it. Understanding how a second mortgage differs from other financing options can help you decide which product fits your situation best.
Documents You Should Have Ready
Having your paperwork organized speeds up the entire approval process. Most private lenders in BC will ask for:
- Government-issued photo identification
- Recent mortgage statement, if you already have a mortgage
- Property tax statement or assessment
- Proof of income, such as bank statements or an employment letter
- A basic explanation of your exit strategy
How the Private Mortgage Approval Process Works, Step by Step
The timeline for private mortgages moves much faster than a bank. Here is what a typical file looks like from start to finish.
- Submit your application. You provide basic personal, property, and financial details.
- Initial review. The lender checks your equity position and exit plan before ordering an appraisal.
- Appraisal is completed. This usually takes 24 hours to one week, depending on location.
- Underwriting and approval. The lender confirms LTV, reviews documents, and issues formal approval terms.
- Legal paperwork. Lawyers prepare the mortgage documents and send them for signing.
- Funding. Once documents are signed and registered, funds are released, often within a few days.
For a closer look at typical timelines, see our full breakdown of how long mortgage approval takes with different types of lenders.
Frequently Asked Questions
What is the minimum credit score for a private mortgage in BC?
Most private lenders in BC do not set a strict minimum credit score. Approval depends mainly on your home equity and exit strategy, not your credit history.
What LTV do I need to qualify for a private mortgage?
Most lenders prefer an LTV of 75% or lower on houses and townhouses, and around 65% on condos, though this varies by lender and property type.
How fast can a private mortgage be approved in BC?
Many private lenders issue an initial approval within a few hours to a few days, with full funding often completed within one to two weeks.
Do private lenders require income verification?
Private lenders review basic income to confirm affordability, but they do not require the strict documentation banks demand, such as two years of tax returns.
Talk to a BC Private Lending Team You Can Trust
The private mortgage approval process in BC comes down to three things: your equity, your exit plan, and having the right paperwork ready. When those pieces line up, approval can happen faster than most people expect. If you want a straightforward assessment of where you stand, the team at Seven Lending reviews every file personally and can walk you through your options with no obligation.