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WHEN THE BANKS OR A-LENDERS SAY "NO"
B Mortgage
If the banks, or A lenders, turn you down for a mortgage, there’s an entire industry of alternative, or B, lenders you can turn to for your financing needs.
B lenders fill an important gap in Canada’s tightly regulated mortgage market. If you’re turned down for a home loan by one of the country’s A lenders, like the big six banks or credit unions, a B lender mortgage can keep your homeownership dreams alive.
B lender mortgages are intended for borrowers who can’t meet the qualification requirements of A lenders, so the costs and conditions involved can make them more expensive. Understanding how a B lender mortgage works is a must before you apply for one.
B lenders fill an important gap in Canada’s tightly regulated mortgage market. If you’re turned down for a home loan by one of the country’s A lenders, like the big six banks or credit unions, a B lender mortgage can keep your homeownership dreams alive.
B lender mortgages are intended for borrowers who can’t meet the qualification requirements of A lenders, so the costs and conditions involved can make them more expensive. Understanding how a B lender mortgage works is a must before you apply for one.
What is a B lender?
B lenders, sometimes called subprime lenders, are financial institutions that specialize in mortgages but are not regulated to the same extent as A lenders. Because they don’t adhere to the standards put in place for chartered banks like RBC, TD or Scotiabank, B lenders can be more flexible in who they lend to and the terms they offer.
A lenders, for example, are required to stress test their mortgage applicants and ensure their debt service ratios are below established limits. B lenders do not have to stress test their clients and have more leeway where debt levels are concerned. This allows them to lend certain borrowers more money than they might get from an A lender.
Note that B lenders will work with you even if you can get approved for a mortgage at an A lender. In many cases, that “B” refers to the borrowers a lender is willing to work with — still creditworthy.
A lenders, for example, are required to stress test their mortgage applicants and ensure their debt service ratios are below established limits. B lenders do not have to stress test their clients and have more leeway where debt levels are concerned. This allows them to lend certain borrowers more money than they might get from an A lender.
Note that B lenders will work with you even if you can get approved for a mortgage at an A lender. In many cases, that “B” refers to the borrowers a lender is willing to work with — still creditworthy.
Who should consider a B lender mortgage?
Canada wouldn’t need B lenders if everyone could walk into their local bank branch and get approved for a cheap, hassle-free mortgage. But there are several borrowers for whom a B lender mortgage might be the best — or only — option, including:
- New arrivals to Canada. You might come to Canada gainfully employed and up to your ears in savings, but with no Canadian credit history, an A lender may not approve you for a home loan.
- People with bad credit. A low credit score or badly blemished credit profile could quickly disqualify you from getting a mortgage anywhere but at a B lender.
- The self-employed. Being your own boss can create challenges in demonstrating to A lenders that you earn an adequate, consistent income.
- Real estate investors. Some B lenders offer mortgages specifically designed for funding investment purchases.
How to get approved for a B lender mortgage
With B Lender Mortgages, we work with all credit scores. No matter how challenging your current credit situation is, you can get pre-approved. We work with over 40+ lenders and private lenders are ready to approve you.
B lenders are regulated, reputable, and are a fast growing option for many Canadians. B Lenders are very flexible with your income and credit, as long as you can demonstrate you have cash flow.
B Lender Mortgage is a terrific midpoint when you cannot qualify for a bank mortgage and a private mortgage is too costly. If, somehow, a B Lender is not an option for you, we always have our own in-house private lenders ready to help you.
Reasons to Consider a B Lender:
- You have credit issues and your credit score is < 650
- You are self-employed without verifiable income or report Low Income or No Income on your tax returns
- You need to take out home equity to consolidate debts or past-due bills
- You are or have been bankrupt or filed a consumer proposal in the past 7 years
- You have non traditional Income, for example commission income, cash, disability, seasonal income, and others.
- You are new to Canada or a foreign resident
- You need short-term bridge financing to improve your credit score
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FAQs
Questions
you may have!
What is a B lender?
Also known as subprime lenders, B lenders provide funding for homeowners and home buyers who don’t qualify for mortgages at chartered banks. Because B lenders are not federally regulated, they have more lenient standards regarding a borrower’s credit history and income sources.
Is a B lender mortgage a good idea?
If you can’t get a mortgage from an A lender, getting one from a B lender can be a solid second option. You might pay more in interest and fees than if you were borrowing from an A lender, but you may also be offered a customized loan that better fits your financial situation. B lender mortgages typically last three years or less, so you may only pay a higher interest rate for a fraction of your mortgage’s amortization period.
What types of mortgage products do B lenders offer?
B lending products including bad credit mortgages, self-employed mortgage, investment property mortgages, equity takeout, home equity line of credit, and new to Canada mortgages. One of the most popular B Lender Mortgages is the self-employed mortgage, or stated income mortgage.
What are B lender mortgage fees?
B Lenders typically charge a one-time 1% lender fee. Most B Lenders do not charge any fee at the time of renewal. The 1% lender fee can potentially be added to the mortgage, if there’s enough down payment or equity.
B Lenders also withhold and remit the property tax on your behalf. For example, if the estimated property tax is $6,000 per year, they will withhold $500 per month property tax amount for you and remit that to the city.
By the end of the year, there’s typically a true-up process. The B Lender will adjust the property tax amount based on the your final property tax bill from the city.
What mortgage terms B lenders offer?
B Lenders offer 1 to 5 year mortgage terms. 1 year term is the most popular options for B Lender Mortgages. Similar to Banks, B Lenders have prepayment penalties if you pay off your mortgage prior to the end of your. Prepayment penalties differs from Lender to Lender. For a 1 year term, the most common prepayment penalty is 3 months of interest payments. B Lenders also offer longer amortization up to 35 years or 40 years. There could be a mortgage rate premium added to amortization longer than 30 years.