First Mortgage in Surrey: Private First Mortgages Explained
A private first mortgage becomes the main loan on your Surrey property when a bank can't approve you in time: buying a townhouse or house before your income is documented, paying out a lender that declined to renew, or clearing arrears. It's approved on equity and the property. Here's how it works in Surrey and what to budget.
Key takeaways
- A private first mortgage is the senior charge on title, repaid first in a court-supervised sale.
- Typical 2026 pricing: about 7% to 11% interest-only, with a 1% to 3% lender fee.
- Lenders commonly lend up to 75% to 80% on detached homes and somewhat less on townhouses and condos.
- BC property transfer tax applies on purchases; BC has no separate municipal land transfer tax.
What is a private mortgage?
A private mortgage is a loan on property from a non-bank lender — a mortgage investment corporation, a private lending company or an individual investor. It isn't subject to the federal stress test or bank ratios. In BC, brokers and administrators are licensed by BCFSA under the Mortgage Services Act, in force from October 13, 2026.
What is a second mortgage — and how is a first different?
A second mortgage adds money behind an existing first. A private first pays out your existing lender or funds a purchase, and becomes the senior loan. It's cheaper per dollar than a second, but applies its rate to the whole balance. See second mortgages in Surrey to compare.
Why are private mortgage positions important?
In a BC foreclosure, the first mortgage is repaid before anyone else from a court-approved sale. That's why first-position lenders charge less and lend more — and why a private first lender decides whether a second can be added behind it.
Who lends private first mortgages in Surrey?
- BC mortgage investment corporations lending across Metro Vancouver and the Fraser Valley.
- Private lending companies for purchases and quick closings.
- Individual investors through licensed brokerages.
How does the payment work on a Surrey private first mortgage?
Interest-only, monthly. Example: an $820,000 Surrey townhouse with a $574,000 private first mortgage (70% loan-to-value) at 9.49%, compounded semi-annually:
| Item | Amount |
|---|---|
| Monthly interest-only payment | $4,452.15 |
| Interest over 12 months | about $53,426 |
| Lender fee (2%) | $11,480 |
| Broker fee, where one applies (1%) | $5,740 |
| Legal and appraisal (estimate) | about $2,100 |
| Effective first-year cost | about 13.1% of the net funds |
Strata fees on a townhouse are additional, and the lender will check them.
What's the term of a private first mortgage?
Usually 12 months. Common exits in Surrey: documenting self-employed or trade income, adding a co-borrower, or selling another property — then refinancing to a bank or credit union.
What are the criteria to get approved for a private first mortgage in Surrey?
- Loan-to-value up to about 75% to 80% on detached homes, lower on strata properties.
- An appraisal, plus strata documents for townhouses and condos.
- For purchases, a down payment of at least 20% to 30%, plus property transfer tax and legal costs.
- Proof of ability to pay the interest.
- A clear exit.
Why are private first mortgage rates higher than traditional mortgages?
Private lenders use investor capital, can't insure their loans, lend to borrowers outside bank rules and must earn their return over a short term. BC's court foreclosure process adds time and cost if a loan defaults.
What are the pros and cons of a private first mortgage in Surrey?
| Pros | Cons |
|---|---|
| Lowest-cost private option | Private rate on the full balance |
| Fast purchases when banks can't approve in time | Property transfer tax and fees on purchases |
| Flexible on trade and self-employed income | Lower limits on strata properties |
| Court process gives a redemption period | Short, interest-only term |
Sources
This article is general information, not financial or legal advice. Rate and fee ranges are typical of the private market in 2026 and vary by lender, property and file. Examples are illustrative and rounded, not market averages. Mortgage financing is subject to lender approval.
Frequently asked questions
Yes, usually with at least 25% to 30% down, and the lender will review the strata.
No. BC's property transfer tax applies province-wide; there's no separate municipal tax.
Yes. It can pay out your existing lender at maturity while you work toward a bank or credit-union refinance.
Often within a week once the appraisal and lawyer or notary are arranged.
Need a private first mortgage in Surrey?
We'll compare BC private lenders and MICs and show every cost, plus the exit, in writing.