Private mortgages solve a real problem — they lend where banks will not, on equity rather than perfect income. When they go wrong, they go wrong differently, and it helps to know how.
What is different
Short terms. Private mortgages are often a year or two. The looming event is frequently not a missed payment but the term ending with no exit arranged.
Higher rates and fees. Arrears compound faster, and the sums grow quickly.
Less process, more speed. A private lender is often a smaller operation with less bureaucracy — which sometimes means more flexibility, and sometimes means moving to enforcement faster than a bank would.
Equity focus. A private lender lent against the property. Where there is equity, enforcement is a more attractive route for them than it might be for a bank.
The exit problem
Private money is a bridge. A bridge only works if there is something at the other end — a refinance you will qualify for, a sale, or income that has genuinely recovered.
If the term is ending and no exit exists, that is the actual problem, and it needs addressing before the term date rather than after. Extensions are sometimes available, usually at a cost, and they are much easier to negotiate before default than during it.
What to do
Speak to them early. Smaller lenders are often more approachable than institutions, and a specific proposal — a sale in progress, a refinance application submitted — carries real weight.
Get every arrangement in writing. This matters more here, not less, because there is often less formal process to fall back on.
Check the fees carefully. Renewal and extension fees can be substantial, and they get added to what you owe. Know the number before agreeing.
And be realistic about refinancing out. If your position has not improved since you took the private mortgage, an exit by refinance may not be available — in which case a sale on your own terms, while there is equity, is usually the stronger move.
The enforcement route is the same
Whoever holds the mortgage, foreclosure in Alberta runs through the Court of King's Bench. The process does not change because the lender is private — only the speed with which they might start it.
Questions people ask
General information about the Alberta foreclosure process — not legal or financial advice, and nothing here guarantees an outcome. Every file is different.