“Equity lender” isn’t one kind of company. In Alberta, equity-based mortgages come from a few different types of lenders, each with its own rules, costs and sweet spots. Knowing the landscape helps you understand why a broker might steer you toward one rather than another.

Alternative lenders

Often trust companies and other established mortgage lenders, sometimes called “B lenders.” They serve borrowers who are close to bank-ready but don’t fit a bank’s formula, for example with self-employed income or recovering credit. They still look at income and credit, but more flexibly, and they usually have a lender fee and a higher rate than a bank. For many people, this is the most affordable form of equity lending.

Credit unions

Alberta credit unions are provincially regulated, and some have more room to tailor a mortgage to a member’s situation than large banks. Policies vary widely from one credit union to the next. Some are particularly comfortable with local and rural properties.

Private lenders

Mortgage investment corporations, investor groups and individuals. They focus most heavily on equity and the exit plan, can move quickly, and accept situations others won’t, at the highest cost of the three. Private lending is usually a short-term bridge rather than a long-term home loan.

How they compare

  • Cost: alternative lenders and credit unions usually cost less than private lenders.
  • Flexibility: private lenders are the most flexible, then alternative lenders.
  • Term: private terms are usually shortest.
  • Property types: policies differ, especially for rural, acreage and unusual properties.

Why a broker matters here

Each lender’s rules are different, and they change. Applying directly to the wrong lender can mean a decline, or a more expensive loan than you needed. A broker can match your property and situation to lenders likely to say yes, starting with the lowest-cost option. See what equity mortgages cost.

Before you choose

Ask any lender or broker:

  1. Which type of lender is this, and why is it the right fit?
  2. What’s the rate, every fee, and the total cost over the term?
  3. What happens at the end of the term?
  4. Could a bank or credit union approve me instead?

More questions to ask are in questions to ask before you borrow against your home.

This article is general information, not financial or legal advice. Lender requirements, rates and fees change and depend on your situation.