Short answer
Start with an A or insured improvement program when income, credit, property and timelines fit. Alternative/B financing can accept a wider income story or project profile at a higher cost. MIC or private funding can solve a short construction gap, but only with a clear completion and refinance or sale exit.
The client problem behind the question
The borrower shops only for the largest advance and overlooks when the money is released, how interest is calculated and how the temporary loan will be repaid.
What the official guidance establishes
CMHC publishes insured improvement options, while every lender sets its own conventional and construction policy. MICs are institutional mortgage investment corporations; private mortgages may be funded by an individual or private group. Their terms and flexibility are not identical.
Where the answer can change
A lower advertised rate can still fail if the draw structure does not match the contractor schedule. A private or MIC loan may be interest-only, open, partially open or longer than 12 months, and some MICs may align maturity with the project, subject to policy and pricing.
A practical Ontario example
Illustration only: A self-employed homeowner cannot document income under the first A-lender method but has strong equity and a 10-month project. A properly sized MIC facility may complete the work, followed by an alternative or A refinance once income and value are documented.
What to do before committing
Compare net advance, lender and broker fees, legal and appraisal costs, draw fees, interest reserve, prepayment terms, maturity and the evidence required for the exit lender.
Questions Rajiv would ask
- What deadline, condition or closing problem must be solved?
- Which facts are confirmed by original documents and which are still assumptions?
- Which law, insurer rule or lender policy applies to this exact transaction?
- What happens to the cash requirement and monthly payment if the first option fails?
- What is the practical route back to lower-cost financing, if temporary financing is used?
Rajiv’s broker perspective
I would match the financing to the contractor schedule, not only to the finished value. The practical review includes how much cash is needed before each draw, whether permits and rent are supportable, and what happens if the project costs more or takes longer. A, alternative/B, MIC and private options can each work, but the exit and total cost must be clear before construction begins.
Related: Mortgage declined? Start here · Mortgage Knowledge Centre · Real Estate Centre · Updates & Rules Centre
Would a second opinion help before you commit?
Send Rajiv the property, deadline, financing concern and the documents already available. He can identify the missing questions, compare practical mortgage routes and explain the next step in plain language.