Alternative and B lender mortgages in Ontario

Alternative and B lenders price for risk instead of refusing it. They take the files banks decline: bruised credit, collections, income that does not fit a template, debt ratios above bank limits, or a property a bank will not touch.

When B lending is the right call

• Your credit score is below what a bank will accept, or there are collections on file.
• Your income is real but does not document the way a bank requires.
• Your debt ratios are above bank limits but the payment is genuinely affordable.
• You need to clear tax arrears or mortgage arrears before a prime lender will look.
• The property is unusual, rural, or has a feature a bank will not finance.

What to check before you sign

• Expect a rate above prime, a lender fee of around one percent, and a broker fee. Ask for both in writing before you commit.
• Terms are short, usually one or two years. Treat a B mortgage as a term, not a destination.
• Ask for a written exit plan on day one: what your credit, income documents and debt ratios need to look like by maturity to qualify at a prime lender.
• Check the prepayment penalty structure. It often works differently from a bank mortgage.
• Use the term to clean up the file. Clear collections, keep every payment on time, and file your taxes.
• No approval is guaranteed. We will tell you whether the file has a real chance before you spend money on it.

Documents to gather

• Government photo ID for each applicant
• Whatever income evidence exists: pay stubs, bank statements, invoices, T1s, financials
• Current mortgage statement and property tax bill showing status
• Recent credit report from both bureaus, if you have one
• Details of any arrears, judgments, collections or liens
• Down payment or equity confirmation

How we run the file

1. 01 Find out what actually failedBanks rarely explain a decline. We read the credit file and the income evidence and identify the real reason.
2. 02 Start at the cheapest tier that will approveSome prime lenders have more flexibility than people assume. We only move down a tier when we have to.
3. 03 Full fee disclosure before you commitRate, lender fee, broker fee, term and total cost, in writing.
4. 04 Write the exit planA target date and the specific things that must be true by then to move to a prime lender.

Questions we get asked

What credit score do I need?

Alternative lenders work well below prime thresholds and some will look past a low score entirely where there is equity. There is no single cutoff, because equity, income and the reason for the damage all matter.

Why is there a lender fee?

These files are underwritten individually by a person rather than run through an automated system. A fee of around one percent is standard market practice in this tier and is disclosed before you commit.

How long will I be stuck at a higher rate?

Usually one to three years, if you follow the plan. Clean payment history, corrected credit reporting, lower balances and current taxes are what move a file back to prime.

Is an alternative mortgage a bad idea?

It is the right tool when the alternative is no financing at all, or when it solves a problem that is costing you more each month than the rate difference. It is the wrong tool if there is no plan to leave it.