A bank refusal hurts, especially when you prepared your file in good faith. But here is what the statistics don't say often enough: a bank refusal is a refusal of the bank's criteria, not a verdict on your financial worth. Banks apply tight grids (stress test, debt ratios, "standard" income). Many good files simply don't fit those boxes. Here are the five doors that remain open.

First: understand why you were declined

Ask for the precise reason. It determines what comes next:

  • Insufficient or non-standard income (self-employed, variable income, commissions)
  • Credit score below the bank's threshold
  • Debt ratio too high (often because of consumer debt)
  • The property itself (unusual type, plex, rural, condition)
  • The stress test: you qualify at the actual rate, but not at the higher test rate

Each cause has a different solution. A refusal for debt is often solved by consolidation; a refusal for income, by a lender who assesses differently.

Option 1: Another bank or a credit union

Criteria vary from one institution to another. If the refusal comes down to a detail (a ratio slightly over the limit, an internal policy), a second institution may say yes. The honest limit: if the cause is structural (self-employed income, damaged credit, an unusual building), the major institutions apply similar rules, and multiplying applications takes time you may not have.

Option 2: An alternative ("B") lender

Alternative lenders accept broader profiles than banks: lower credit scores, self-employed income documented in other ways. Rates are somewhat higher than at banks, usually with setup fees. It is a good middle path when the file is "almost bankable". The limit: timelines remain institutional, and some files (60-day notice, arrears, a particular property) stay outside the grid.

Option 3: A private mortgage

This is the option for files the grids don't capture. A private lender looks first at your property's equity, its value minus what you owe on it, rather than your score or your T4s. In practice: a fast eligibility decision (sometimes under 48 h), funding in as little as 5 business days, and real flexibility on the type of income and property.

The trade-off, plainly: it costs more. Indicative rates of about 12% on a 1st mortgage and 15% on a 2nd, lender fees of 2 to 5% of the loan, plus notary fees. That is why a private loan is best thought of as a 6 to 24 month bridge: we solve the problem the bank couldn't, then return to conventional financing once credit is restored or income is documented. Any serious lender should present this exit strategy on the first call, and all costs in writing before signing.

Option 4: Reduce the need instead of increasing the financing

Sometimes the best answer to a refusal is not another lender but a different file: a larger down payment (family help, selling an asset), a co-borrower or guarantor, or consolidating consumer debt to bring the debt ratio down, which can requalify the file at a bank a few months later.

Option 5: Wait and rebuild (when nothing is urgent)

If no deadline is forcing your hand, 6 to 12 months of rebuilding (on-time payments, lower balances, documented income) genuinely changes a file. The mistake would be to choose this path when a deadline exists (purchase offer, maturity, proceedings): in that case, waiting costs more than the financing.

How to choose?

Two questions settle most cases. Do I have a deadline? If so, options 1, 2 and 5 are often too slow. Do I have equity? If your property is worth significantly more than you owe, option 3 almost always exists. Total financing is generally limited to 75% of the property's value.

Frequently asked questions

Does a bank refusal hurt my credit file? The application itself leaves a trace (an "inquiry"), but the refusal as such is not recorded. Multiple applications in a short time can weigh, however. A private, equity-based assessment can be done without a credit inquiry.

Can I buy a property with a private loan after a refusal? Yes, with a sufficient down payment, generally from 20 to 25%. The decision rests on the property and the down payment rather than on income alone.

Is private lending legal and regulated in Quebec? Yes. A loan secured by a hypothec must go through a notary, and the hypothec is registered at the land register. Always require full written disclosure of rates and fees before signing.

How long do people stay in a private loan? Typically 6 to 24 months. The goal is set from the start: a return to a conventional lender, a sale, or another strategy depending on your situation.

Recently declined? Vortex Finance is a direct private lender: we decide and fund with our own capital, based on equity. Free first assessment, no credit impact. Check your eligibility in 2 minutes.

For information only; not personalized financial or legal advice. Rates and fees are indicative, vary by file, and are confirmed in writing before any signature. Every file is assessed individually; no approval is guaranteed.