What Makes a Private Mortgage File Worth a Closer Look?

A broker calls us because the answer on a file is not obvious. Maybe the bank declined it. Maybe another lender is uncomfortable with the property. The borrower could be self-employed, dealing with a recent credit issue, trying to close quickly or looking for financing that simply does not fit a conventional programme.

Whatever brought the file to us, the first conversation is usually fairly straightforward. What is the property reasonably worth? What is already owing against it? How much does the client need? Those numbers tell us a lot. If there appears to be enough equity for the request to make sense, or the numbers are close enough that we need to see the full picture before deciding, we want to look at the file.

That does not mean the mortgage is approved. It means there is enough there for us to keep working. For a broker, that distinction matters. You do not necessarily need to solve every part of a difficult file before calling us. If the property and the numbers suggest there may be a deal, send it over and let us take a look.

Another Lender’s Answer Is Not Necessarily Ours

We still want to know why the other lender said no. If the issue was income documentation, that matters. If it was credit, we want to understand what happened. If another lender was uncomfortable with the property, we want to know why. Then we look at the deal ourselves.

Conventional lenders work within their own programmes, policies and documentation requirements. A borrower or property can fall outside those requirements without answering the separate question of whether a private mortgage makes sense. A self-employed borrower with strong property equity but difficult-to-document income is a different file from someone dealing with significant recent credit problems. A rush purchase raises different questions from a refinance. Bridge financing is different again, as is construction, acreage or a property that simply sits outside another lender’s appetite.

Some of the issues that concerned the original lender may concern us too. The difference is that we consider them alongside the property, equity, mortgage position, amount required and what the borrower is trying to accomplish. Sometimes we reach the same conclusion as the original lender. Sometimes we do not. A decline tells us one financing route did not work. It does not answer the private-lending question.

Equity Gives Us a Place to Start

OSM is an equity lender, so one of the first things we look at is how much room appears to exist in the property. We need a reasonable value, the financing already registered against it and the amount the borrower wants to add. That gives us an early picture of the leverage and whether the requested financing is within, or reasonably close to, something worth reviewing.

There is more to it than subtracting mortgage debt from property value. A first mortgage and a second mortgage at the same loan-to-value ratio do not necessarily represent the same lending position. A conventional residential property in an active market can also be very different from acreage, vacant land or a construction project.

The value behind the calculation matters just as much. Suppose total mortgage debt after the proposed financing would be $700,000 against a property believed to be worth $1 million. That is 70% loan-to-value. If the supportable property value is actually $900,000, the same debt is almost 78%. The mortgage amount is the same, but the risk is not.

That is why the quality of the valuation matters. Property characteristics, location, comparable-market evidence and current market conditions can all affect the value we are prepared to work with. Equity tells us whether there may be something worth looking at. Then we need to understand the deal behind the numbers.

The Application, Bureau and Valuation Give Us the First Real Picture

If the initial numbers appear workable, we will usually want the mortgage application, credit bureau and property valuation. The application tells us what is actually happening. We can see what the borrower needs, what financing is already in place, why the funds are required and how the proposed mortgage fits into the transaction.

If something unusual has brought the file to private lending, tell us. A credit problem, unusual income, a pending sale, a construction delay or a last-minute financing change does not become easier to underwrite because it was left out of the initial story. We would rather understand what we are dealing with from the beginning.

The bureau gives us another part of that picture. Being an equity lender does not mean credit stops mattering. We want to understand what the borrower already owes, how those obligations are being handled and whether something in the credit history could affect the mortgage or the proposed exit. We are not looking at a score in isolation. We are trying to understand the borrower’s financial circumstances.

The valuation gives us the security side of the file. Once those pieces are together, we can usually tell whether there is enough there to continue and what we need next. Some files will require more. We may need payout statements, bank statements, income information, title details, construction documents or other supporting material. But we do not need every conceivable document before deciding whether an opportunity is worth working on. That first decision can often happen quickly. It is still only the first decision.

What Is the Mortgage Actually Supposed to Accomplish?

Once we understand the property and the basic numbers, we want to know what the borrower is trying to accomplish. A borrower could be trying to complete a purchase after another financing source fell through. They may need bridge financing between transactions. The funds could be for construction, refinancing, debt consolidation or an equity take-out. The borrower may need time to deal with an income or credit issue before conventional financing becomes a possibility again. Those situations may involve similar mortgage amounts, but they are not the same deal.

If the mortgage is bridging a timing problem, what closes the gap? If it is consolidating debt, does the new structure actually improve the borrower’s position? If it is supporting construction, what remains to be completed and what happens when the work is finished? We want to know what the money is supposed to fix.

That leads directly to the exit. Private financing is often being used to give the borrower time to accomplish something specific. If the plan is eventually to refinance conventionally, we want to understand what should be different when that time comes. Perhaps debt will have been reduced. A credit issue may have had time to improve. Income may become easier to document. A construction project may be complete.

If the exit is the sale of a property, the expected timing and proceeds need to make sense against the debt. If repayment depends on another transaction or event, we need enough information to decide whether that expectation is reasonable. ‘Refinance later’ by itself does not tell us much. A workable exit explains how the mortgage is expected to be repaid, what needs to change before that can happen and whether the borrower has a reasonable amount of time to get there. No one can guarantee what the market or a future lender will do. We are looking for a plan that makes sense based on what we know today.

If the File Is Close, We Would Rather Talk About It

Not every private mortgage opportunity fits neatly into a guideline. That is often why the broker is calling in the first place. The borrower may have a recent credit problem. The mortgage might be in second or third position. The property may be unusual. The closing could be under pressure. One part of the file may be weak while another part is particularly strong.

None of that means the deal works. Sometimes the leverage is too high. Sometimes the valuation does not support the request. Sometimes the property creates a problem. Sometimes the exit does not hold up. But there is a difference between a deal that clearly does not work and one where the numbers are close enough that we should understand the complete file before deciding. If there appears to be enough equity and the overall structure is reasonably close to something we may consider, we would rather have the conversation.

OSM also works with a network of individual private lenders. Different lenders can have different appetites around property type, location, mortgage position, loan size and leverage. That does not mean there is a lender for every file. It means one lender’s appetite does not necessarily represent the whole private market. Part of our job is understanding the deal well enough to know whether there may be a reasonable fit.

The property still has to support the financing. The numbers still have to make sense, and there still needs to be a credible way out. Sometimes, after looking at all of that, the answer is no. That is part of good private lending too.

Sometimes No Is the Right Answer

Having equity does not automatically make another mortgage a good idea. Private financing can carry higher borrowing costs than conventional financing and is often used for shorter-term needs. That makes the reason for the mortgage, and the plan for paying it out, especially important.

If another mortgage simply adds debt and cost without improving the borrower’s position, or if the exit depends on assumptions that do not stand up, the financing may only push the problem forward. We would rather give the broker a clear answer than keep a deal alive when there is no reasonable path ahead. A private mortgage should solve something.

Have a File Worth Discussing?

If you have a private mortgage opportunity in British Columbia or Alberta and the property and numbers suggest there may be something worth working with, send it over.

Start with the mortgage application, credit bureau and property valuation. Tell us what the client needs, what brought the file to private lending and how you see the exit. We will take a look and tell you what we need next.

You do not need to have every question answered before you call. If the numbers work, or they are close enough that the deal deserves a proper look, we would rather see the file.

Submit a Deal

Frequently Asked Questions

What do private mortgage lenders look for when reviewing a file?

Property value and available equity are often important starting points, but they are only part of the decision. Mortgage position, borrower circumstances, credit information, the amount required, purpose of the financing and proposed exit can all affect whether a private mortgage makes sense.

Does a bank decline mean a private mortgage will not work?

No. It means the file did not fit that lender’s requirements. A private lender still needs to understand why the conventional financing did not work and then make its own assessment of the property, equity, structure and repayment plan.

Does credit matter to an equity lender?

Yes. The credit bureau helps us understand existing obligations, repayment history and circumstances that may affect the mortgage or its eventual exit. Equity can carry substantial weight without making the borrower’s financial history irrelevant.

What should a mortgage broker send OSM first?

OSM generally begins with the mortgage application, credit bureau and property valuation. Those documents can often provide enough information for an initial assessment. Additional documents may be requested depending on the particular file.

Is an initial assessment the same as final approval?

No. An initial assessment means there appears to be enough in the file to continue reviewing it. Further underwriting, verification, documentation and conditions may still be required before a mortgage can proceed to funding.

What makes a private mortgage exit strategy credible?

A credible exit explains how the mortgage is expected to be repaid, what has to change during the private term and whether there is a reasonable amount of time for that change to occur. If the plan is to refinance conventionally, there should be a reasonable explanation for why that financing may be more achievable at maturity than it is today.

Further Reading

CMHC: Effective Exit Strategies

CMHC examines exit strategies in alternative mortgage lending and why repayment planning should be considered when the mortgage is originated.

https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-research/research-reports/housing-finance/alternative-lenders-series/effective-exit-strategies

CMHC: Residential Mortgage Industry Report, Spring 2026

Current Canadian mortgage-market research covering lender activity, borrower trends, alternative lending and mortgage performance.

https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-research/research-reports/housing-finance/residential-mortgage-industry-report

CMHC: Your Home Value

CMHC background on residential property value, including the role of property characteristics, location and comparable-market information.

https://www.cmhc-schl.gc.ca/consumers/owning-a-home/mortgage-management/your-home-value

Bank of Canada: Consumers’ Path to Mortgage Delinquency

2026 Bank of Canada research examining borrower credit behaviour and financial signals that can emerge before mortgage delinquency.

https://www.bankofcanada.ca/2026/02/staff-analytical-paper-2026-3/