BC Private Mortgages: Rules, Costs and the New Mortgage Services Act
British Columbia's private mortgage market is shaped by high property values, a court-supervised foreclosure process and — from October 13, 2026 — a new law. The Mortgage Services Act replaces the decades-old Mortgage Brokers Act, with new licensing for brokerages, brokers and administrators overseen by the BC Financial Services Authority (BCFSA). Here's how private first and second mortgages work in BC today.
Key takeaways
- The Mortgage Services Act comes into force on October 13, 2026, replacing the Mortgage Brokers Act; brokers, brokerages and administrators must be licensed by BCFSA.
- A separate licence for mortgage lenders is part of the new Act but has no announced in-force date yet.
- BC lenders enforce through court foreclosure; the default redemption period in the order nisi is six months.
- Typical 2026 pricing: private firsts about 7% to 11%, private seconds about 10% to 15%, plus lender fees.
What is a private mortgage in BC?
A private mortgage is a loan registered on your property by a non-bank lender — a mortgage investment corporation, a private lending company or an individual investor. In the Lower Mainland and Victoria, where homes are expensive and equity is often large, private mortgages are common for self-employed borrowers, buyers who need to close before they sell, owners with tax or strata arrears, and borrowers rebuilding credit.
The people who arrange and administer these loans are regulated by BCFSA. Under the Mortgage Services Act, the dealing, trading and administering categories take effect on October 13, 2026; the Act also creates a licence for mortgage lenders, whose start date hasn't yet been announced.
What is a second mortgage?
A second mortgage sits behind your first on title. With high BC property values, a second often lets a homeowner access a large amount without disturbing a low-rate first mortgage. Lenders limit combined loan-to-value — commonly about 75% for detached homes in strong urban markets and lower for condos, where strata finances and bylaws also get reviewed. See private second mortgages.
Why are private mortgage positions important in BC?
In a BC foreclosure, the court oversees the sale and the order in which charges are paid: first mortgage, then second, then later charges. Because foreclosure runs through the BC Supreme Court with a redemption period, enforcement is slower and costlier for lenders than Ontario's power of sale. Second-position lenders price that time and cost into their rates and keep their loan-to-value limits conservative.
Who lends private mortgages in BC?
- Mortgage investment corporations, including BC-based MICs, under section 130.1 of the Income Tax Act.
- Private lending companies and syndicated investor groups.
- Individual private lenders, typically through a licensed brokerage.
Under the new Act, licensees may only provide services to lenders that are licensed or otherwise authorized. Expect your brokerage's paperwork to change as BCFSA's rules take effect.
How does the payment work on BC private mortgages?
Interest-only, monthly, with fees deducted from the advance. Example: a $800,000 private first mortgage on a $1,250,000 home (64% loan-to-value) at 8.99%, compounded semi-annually:
| Item | Amount |
|---|---|
| Monthly interest-only payment | $5,884.07 |
| Interest over 12 months | about $70,609 |
| Lender fee (2%) | $16,000 |
| Broker fee, where one applies (1%) | $8,000 |
| Legal and appraisal (estimate) | about $2,100 |
| Effective first-year cost | about 12.5% of the net funds |
On large BC balances, percentage fees become large dollar amounts. Negotiate them, and compare a second mortgage on just the new money if your existing first has a low rate.
What's the term of a BC private mortgage?
Usually 12 months, sometimes 6 to 24. Purchase-bridge loans are often shorter and tied to a specific sale. At maturity, you repay, refinance or renew — see private mortgage renewal.
What are the criteria to get approved for a private mortgage in BC?
- Loan-to-value: roughly 75% to 80% on firsts for marketable urban homes; about 75% combined on seconds; lower for condos, rural and specialty property.
- Appraisal and, for strata units, the strata documents.
- Property taxes and any strata fees current, or paid from the advance.
- Evidence the payments can be made and a clear exit.
When buying, remember BC's property transfer tax is due on registration and usually can't be financed by the lender — budget for it separately.
Why are BC private mortgage rates higher than traditional mortgages?
Investor capital costs more than bank deposits, private mortgages can't be insured, and private borrowers fall outside bank rules. In BC, the court foreclosure process adds time and legal cost to any enforcement, which lenders price in — especially in second position.
What are the pros and cons of private mortgages in BC?
| Pros | Cons |
|---|---|
| Large equity in BC homes supports sizable private loans | Percentage fees are large in dollar terms on big balances |
| Court foreclosure gives borrowers a redemption period | Foreclosure costs are added to what you owe |
| New licensing rules strengthen oversight of brokers | Rules for lender licensing are still being finalized |
| Fast approvals on equity, without the stress test | Short, interest-only terms need a firm exit plan |
Sources
This article is general information, not financial or legal advice. BC's mortgage rules are changing as the Mortgage Services Act takes effect; confirm current requirements with BCFSA and a lawyer. Rate and fee ranges are typical of 2026 and vary by lender. Mortgage financing is subject to lender approval.
Frequently asked questions
The Mortgage Services Act replaced the Mortgage Brokers Act. Mortgage brokers, brokerages and administrators now need licences under the new Act, and BCFSA's rules for their conduct apply. A licence for mortgage lenders is coming but has no announced start date.
It runs through the BC Supreme Court. The order nisi usually sets a six-month redemption period, which the court can shorten or extend. Get legal advice as soon as you receive a demand letter.
Yes. Private bridge financing is common in BC and is usually repaid from the sale of your current home.
Possibly. The order nisi typically includes a personal judgment, so if a court-approved sale doesn't cover the debt, the lender can pursue the shortfall.
BC homeowner considering a private mortgage?
We'll compare private lenders and MICs, show every fee in writing, and plan your refinance back to a bank or credit union.