Alberta Private Mortgages: Rules, Costs and How Foreclosure Works
Alberta's private mortgage market looks different from Ontario's and BC's. Homes cost less, so loans are smaller; foreclosure runs through the courts; and Alberta's Law of Property Act gives individual borrowers unusual protection on many mortgages. Those rules shape what private lenders will offer. Here's what Alberta homeowners should know before taking a private first or second mortgage.
Key takeaways
- Mortgage brokers in Alberta are licensed by the Real Estate Council of Alberta (RECA).
- Foreclosure goes through the Court of King's Bench; the default redemption period for non-farm land is six months, which the court can change.
- The Law of Property Act generally limits a lender to the property itself on many mortgages given by individuals, so private lenders keep loan-to-value conservative.
- Alberta has no land transfer tax, but the mortgage registration levy is $50 plus $5 for every $5,000 of mortgage principal.
What is a private mortgage in Alberta?
A private mortgage is a loan registered on your title by a non-bank lender — a mortgage investment corporation, a private lending company or an individual investor. Albertans use them when income is irregular (common in energy, trades and agriculture-linked work), when credit needs rebuilding, to consolidate debt or tax arrears, or to buy before selling. Private lenders approve on equity and the property rather than bank debt ratios or the stress test.
What is a second mortgage?
A second mortgage is registered behind your existing first. It lets you borrow against equity while keeping your first mortgage's rate. Because Alberta home prices are lower than in Toronto or Vancouver, second mortgages tend to be smaller in dollar terms, and percentage lender fees can feel steep on a small loan — compare the dollar cost, not just the rate. See private second mortgages.
Why are private mortgage positions important in Alberta?
In a judicial sale, the first mortgage is paid before the second, and so on down the title. Alberta adds a twist: section 40 of the Law of Property Act generally restricts a lender to the land and foreclosure, without a personal claim on the borrower's covenant to pay. There are exceptions — for example, for corporate borrowers and for insured high-ratio mortgages — so get legal advice on your own mortgage. For a second-position lender, the practical effect is simple: if the property doesn't cover the debt, it may have no one else to collect from. That's why Alberta private seconds are priced carefully and lenders want real equity behind them.
Who lends private mortgages in Alberta?
- Mortgage investment corporations, including Alberta-based MICs, under section 130.1 of the Income Tax Act.
- Private lending companies active in Calgary, Edmonton and larger regional centres.
- Individual investors, arranged through RECA-licensed mortgage brokerages.
Lenders are more selective outside Calgary and Edmonton, and on acreages and rural property.
How does the payment work on Alberta private mortgages?
Interest-only, monthly, with fees deducted from the advance. Example: a $392,000 private first mortgage on a $560,000 home (70% loan-to-value) at 9.49%, compounded semi-annually:
| Item | Amount |
|---|---|
| Monthly interest-only payment | $3,040.50 |
| Interest over 12 months | about $36,486 |
| Lender fee (2%) | $7,840 |
| Broker fee, where one applies (1%) | $3,920 |
| Legal and appraisal (estimate) | about $2,100 |
| Mortgage registration levy | about $440 |
| Effective first-year cost | about 13.4% of the net funds |
Since January 31, 2025, Alberta's mortgage registration levy is based on the mortgage principal: $50 plus $5 for every $5,000.
What's the term of an Alberta private mortgage?
Usually 12 months, occasionally 6 or 24. Use the term to fix whatever sent you private, then refinance to a bank, credit union or B lender. Provincially regulated credit unions set their own lending rules and can be a useful exit for borrowers whose income is irregular but well documented.
What are the criteria to get approved for a private mortgage in Alberta?
- Loan-to-value: often somewhat more conservative than in Ontario — up to about 75% on firsts for marketable homes in Calgary and Edmonton, less on seconds, and lower again in smaller centres and on acreages.
- Appraisal by an accredited appraiser.
- Property taxes current, or paid out of the advance.
- Ability to pay — bank statements, contracts, rental income or a prepaid interest reserve.
- A defined exit: refinance, sale or a specific lump sum.
Why are Alberta private mortgage rates higher than traditional mortgages?
The same reasons as anywhere — investor capital, no insurance, short terms and borrowers outside bank rules — plus Alberta-specific ones: court foreclosure takes time, and the Law of Property Act can limit a lender's recovery to the property. Lenders respond with lower loan-to-value limits and pricing that reflects the risk of a shortfall.
What are the pros and cons of private mortgages in Alberta?
| Pros | Cons |
|---|---|
| Borrower protections under the Law of Property Act on many mortgages | Lenders compensate with lower loan-to-value limits |
| No land transfer tax on purchases | Percentage fees weigh more on smaller loans |
| Court process gives a redemption period after default | Foreclosure legal costs are added to the debt |
| Fast approvals on equity, without the stress test | Fewer lenders outside Calgary and Edmonton |
Sources
This article is general information, not financial or legal advice. Whether the Law of Property Act protections apply depends on your mortgage and circumstances; get independent legal advice. Rate and fee ranges are typical of 2026 and vary by lender. Mortgage financing is subject to lender approval.
Frequently asked questions
It goes through the Court of King's Bench. For land other than farm land, the redemption period set in the order nisi is six months by default, and the court can shorten or extend it. Most cases take several months to over a year in total.
On many mortgages given by individuals, the Law of Property Act limits the lender to the property. Exceptions exist, including insured high-ratio mortgages and corporate borrowers, so get legal advice about your own mortgage.
The Real Estate Council of Alberta (RECA). Check a broker's licence on RECA's website before sharing documents.
No. Alberta charges land titles registration fees instead, including a levy on mortgage registration of $50 plus $5 per $5,000 of principal.
Alberta homeowner considering a private mortgage?
We'll compare private lenders, MICs and credit-union options, show every fee in writing, and plan the exit.