Don't let a “NO” hold you back. Discover alternative mortgage lenders in Canada who say 'YES' to your homeownership goal. Get the financing you need with flexibility and personalized solutions.
Your Choice for Alternative Mortgage Lenders in Canada
Alternative Lenders, or Alt A banks or “B” lenders, are no longer just a trend. If you don’t meet the big bank’s lending criteria, an Alt A Lender might be the right fit for you!
Turnedaway.ca, we work with all the leading Alternative lenders in Canada to find the right one for your circumstances and get you approved within 24 hours!
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High-Risk Mortgages - Turnedaway.ca
According to The National Bank of Canada’s Housing Affordability Monitor report, every quarter of 2021 showed a decline in housing affordability at the fastest rate in more than 26 years.
It’s no wonder people are turning to alternative mortgage funding to buy a home. If your lender has turned you down, you still have alternative mortgage options available. Find out why and how a B Lender can often get you into a new home when the big banks can’t.
Two Common Traits of Those Denied by Big Banks
Big banks consider many factors before approving or denying a mortgage. Still, two traits most common to those denied and seeking alternative lending are poor credit and insufficient income.
Poor Credit
Most banks require a minimum credit score of 620, but some may accept a credit score as low as 600 under certain conditions. There are many factors that can negatively impact your credit score, including the length of your credit history. Even if you have made all your credit payments on time, if you don’t have a long history of making payments, your credit score may be lower.
Insufficient Income
To qualify for a traditional mortgage, your income must meet a certain threshold based on your desired loan amount and existing debts, known as your debt-to-income ratio (DTI). Most banks prefer a DTI of 42% or lower, and a history of stable income.
Self-employed or those lacking conventional work history may be deemed high risk and may not qualify for a traditional mortgage. Fortunately, alternative lenders offer solutions no matter how unique your financial situations, making it a popular choice in Canada.
The Growth of Alternative Mortgage Funding
While many people were once hesitant to explore alternative lending, the demand for alternative lenders is growing. Canadian Mortgage Professional magazine reports a continued increase in alternative mortgage lending.
Experts credit it to the introduction of B-20 lending guidelines established by The Office of the Superintendent of Financial Institutions (OSFI). These guidelines include a minimum qualifying rate (MQR) or “stress test”. The MQR tests borrowers’ ability to continue mortgage payments under difficult economic circumstances, which has prevented some borrowers from buying a home, even if they technically qualify for a mortgage.
Having less-than-perfect credit or an inability to prove income is now the new norm, making it difficult to get approved by traditional banks. Alternative mortgage lenders have more lenient lending criteria and do not require a stress test, making homeownership possible for those who can’t meet conventional lending requirements.
B Lenders Canada – Alternative Mortgage Solutions
Alt lenders offer alternative mortgage financing options based on common sense rather than the strict criteria used by big banks. If you have low income or bad credit, an experienced mortgage broker can help you find the perfect home purchase solution.
If you have been turned down for a mortgage because you don’t fit the criteria of an ideal borrower, call us today at 1-855-668-3074 to find out how we can help.
No More Frustration From “NO’s”!
We can help you connect with a lender that best fits your needs and find you with the perfect alternative mortgage option. Talk to a mortgage broker now!
What are Alternative Mortgage Lenders?
Alternative mortgage lending is simply an alternative to big bank lending, as the name suggests. Alternative loan lenders include:
- MIC's (Mortgage Investment Corporations)
- Credit unions
- Smaller banks
- Private mortgage lenders
- B Lenders
The big banks are classified as A Lenders. You may be a big bank customer for your other banking needs, but that doesn’t mean they’ll give you a mortgage. B Lenders, however, often will.
What Do Alternative Mortgage Lenders Do?
If you are not eligible for a conventional loan from traditional banks or credit unions, alternative mortgage lenders provide you with an option to get the funds you need. The reasons people might be turned away by traditional lenders could include the following:
- Failing the mortgage stress test
- Having too much debt
- Low credit rating
When you apply for a loan from one of Canada’s leading banks, they’ll put you through their mortgage stress test. Failing this can hurt your eligibility for a traditional mortgage or refinancing and prevent you from refinancing for a better rate. However, if you stay with the same lender when you renew your mortgage, no further tests are required.
Alternative lenders are more flexible when assessing a borrower’s capacity to pay for a mortgage by considering non-conventional forms of income. This could include:
- Rental income from rental or investment properties
- Foreign income
- Low credit rating
A Comparison of Alternative Mortgage Lenders
Several alternative mortgage lenders are available to homebuyers and homeowners who may not meet the strict criteria of more traditional lenders like big banks. To help you understand how they differ from one another, here is a comparison of them:
| Category | Examples | Market Share in Mortgages |
| Private mortgage lenders | Mortgage Investment Companies, Private Mortgage Investors | 1% |
| Smaller banks | Equitable Bank, ICICI Bank, Canadian Western Bank | 5% |
| Credit Unions | Meridian Credit Union, Alterna Savings, DUCA Credit Union, | 14% |
| Monoline Lenders A and B-lenders | First National, MCAP, CMLS | 9% |
Types of Alternative Mortgages
Alternative mortgages come in various forms and sizes to accommodate unique financial situations. Some of the most common types of alternative mortgages include:
Private Mortgages
Private mortgages are loans offered by private investors, not regulated by the government, and are available to high risk borrowers. They typically charge higher interest rates and fees and will look more at an applicant’s home equity rather than income or credit score.
B-Lender Mortgage
Compared to private lenders, B-Lenders provide lower interest rates but have more stringent requirements. Generally, they specialize in CMHC-insured mortgages and require applicants to have a specific credit score and remain within certain debt service limits.
Bridge Financing
If you have your sights set on buying a new home but haven’t sold your existing property yet, bridge loans are an ideal solution for the down payment. This form of alternative financing enables you to receive enough money to cover the mortgage deposit while waiting for funds from selling your property.
Reverse Mortgage
If you’re 55 years or older and a Canadian citizen, you’ll experience the benefits of having a steady cash flow with a reverse mortgage. There’s no need for monthly payments or income verification – just receive your cash within days. It really couldn’t be simpler; all is left is for you to choose what you’ll do with it!
Construction Loans
A construction loan offers you the perfect solution to finance a home that needs to be built from scratch. Some loans can be interest-only payments, while others come with flexible repayment schedules. When the term is up, you can extend the loan or roll it into a mortgage to free up more cash for you to use elsewhere.
Second Mortgages
You can borrow more money while already having an existing loan to obtain a second mortgage. The amount of money you can receive depends on your home’s equity; as your equity increases, so will the amount of money available for borrowing.
Self-Employed Mortgages
A self-employed mortgage can help you qualify for a larger loan than you would without one. Here, the lender will consider your self-employment or business income by adding an extra 15% (gross-up) or by including deductions in that number, increasing your chances of qualifying for a larger mortgage.
Vendor Take Back Mortgages
Vendor Take Back Mortgages (VTB) provide an innovative way for buyers to purchase a home, allowing them to bypass traditional mortgage lenders. By using these loans, sellers can lend money directly to buyers to buy their property.
Rent-to-Own
Rent-to-Own allows renters to rent a home currently up for sale on the market. Throughout their lease, renters can accumulate money for their down payment, potentially boost their credit score, or take care of debts. In the end, they are given the option to purchase the home at a cost agreed in advance.
Let’s Help You Find the Right Lender and Get the Financing You Need
Our expert team and strong connections with trusted lenders in Canada will help you find the ideal mortgage solution that suits your unique needs. Call us today or apply online and let us show you what 30 years of experience in alternative mortgage financing can do for you!
What Can Alternative Lenders Help You With?
Alternative lenders can help provide financing solutions to those who do not meet the strict qualifications required by big banks and offer more flexible terms and a personalized approach to evaluating borrowers’ financial situations.
Bad Credit
Canada’s major banks require that you have a credit score of no less than 600. But there is an alternative way – alt lenders such as B-lenders accept borrowers with credit scores as low as 500.
Private lenders may not require a credit score or even ask to review your credit report when considering you for approval.
Debt Levels
When attempting to secure an insured mortgage, you must meet the Gross Debt Service (GDS) ratio of 39% or less and the Total Debt Service (TDS) ratio of 44% or less as mandated by Canada Mortgage & Housing Corporation (CMHC) guidelines. Banks enforce these same restrictions, whereas alternative lenders allow higher maximum limits.
If you are self-employed, own a business, invest or make commission sales, you may find it hard to get mortgage loans from big banks. Fortunately, alternative lenders can help if your income is from non-traditional sources.
A Lenders vs B Lenders – How They Differ?
The most significant difference between an A Lender and a B Lender is lending criteria. Big banks want to see good to excellent credit and stable, verifiable income.
- A Lenders in Canada prioritize credit score and stable income.
- B Lenders focus more on equity.
- Alternative lenders are not regulated the same way as big banks.
- B Lender rates are moderately higher than traditional lenders.
- Alternative lenders are more flexible with their criteria and terms than big banks.
- Alternative lenders will often look past poor credit scores and are more lenient with qualifying income.
Alternative mortgage lenders can provide a much-needed lifeline when the big banks say no. Talk to our mortgage specialist today!
What Types of Loans Do B Mortgage Lenders Offer?
For the most part, B mortgage lenders will offer the same products as traditional big banks. Most alternative lenders in Ontario and other provinces will offer:
- First Mortgages
- Home Equity Loans
- Home Equity Lines of Credit (HELOC)
- 2nd Mortgages
- Mortgage Refinance & Debt Consolidation
Additionally, alternative lenders offer a variety of mortgage solutions, and they are also more flexible than banks. For example, many of these lenders will offer:
- Poor or Bad Credit Mortgages
- Interest-only mortgages
- 100% rental offset mortgages
- Stated Income Mortgages
- Property Tax Loan Mortgages
- CRA Debt Consolidation Mortgages
With the right lender, you can get the mortgage you need to buy that house or refinance your home.
Who Makes a Good Candidate for Alternative Mortgage Funding?
No standard qualifications make someone a good candidate for an alternative mortgage. And that is the very reason why they are an attractive option for anyone a big bank has denied.
B Lenders don’t follow a one-size-fits-all approach and evaluate each borrower’s financial situation to determine eligibility and risk. Contacting a mortgage broker specializing in alternative lending can help you find a lender even if traditional lenders have denied your loan application.
Turnedaway.ca has relationships with the best alternative lenders in Canada and can negotiate the best rates and terms for you. Apply online today to find an alternative lender.
The Pros and Cons of Alternative Lending
As with anything, there are both pros and cons to alternative lending. Not all apply to all borrowers, but a few apply to most, and it is essential to keep these in mind when considering B Lending options.
Pros:
- Financing solutions to those who don't meet strict A lender qualifications by being less stringent and allowing more leniency on income, credit scores, debt-to-income ratio, and other criteria
- Less strict qualification guidelines than big banks and leniency on qualifying based on income, credit scores, and debt-to-income ratios.
- B lenders can lend on a shorter term, allowing borrowers to improve their finances and qualify for a traditional mortgage with a lower rate in the future.
Cons:
- Moderately higher interest rates and closing costs
- B Lenders will generally require a down payment of 20%.
Overall, alternative lending may cost more than traditional lending. However, it can still be a better option than not buying a home while you improve your financial situation and credit score.
| Mortgage Type | Example Lenders |
|---|---|
| Private Mortgages |
River Rock
Alta West
Fisgard
MCF
For a full list of private lenders, visit our private mortgage lenders page or our private mortgage rates page.
|
| B-Lenders |
MCAP
First National (Excalibur)
Home Trust
CMLS
For a full list of B-lenders, visit our B-lenders page.
|
| Bridge Loans |
TD
Scotiabank
First National
and other Private Lenders and Mortgage Brokers
|
| Reverse Mortgages |
Equitable Trust
Chip Home Equity Bank
|
| Construction Loans |
TD
Scotiabank
First National or Private Lending
and other Private Lenders and Mortgage Brokers
|
| Second Mortgages |
Home Trust
Haventree Bank
Secure Capital
Brookstreet
and other Private Lenders and Mortgage Brokers
|
Is There a List of Alternative Mortgage Lenders in Canada?
While having a list of alternative mortgage lenders in Ontario and anywhere in Canada might seem helpful, it would likely give you a headache to try to sort through them.
It certainly would be difficult doing the legwork to determine which lender would be best suited to work with your financial challenges while giving you the best rate.
Working with a mortgage broker who has a robust network of alternative mortgage lenders can save you time, money, and frustration getting through the mortgage process and into a new home.
When looking for the best alternative mortgage lenders in Canada, you must work with a trusted mortgage broker. Schedule a call with one of our mortgage experts at TurnedAway.ca, and we can help you get the best alt–A lender that works for you.
Why Should I Choose an Alternative Lender?
Many people turn to alternative mortgage lenders because they cannot meet the strict lending criteria of major banks due to various factors like high debt, low income, or poor credit scores.
In addition to that, here are more reasons to consider alternative lenders:
- Alternative lenders can qualify borrowers with unstable or alternative income sources.
- They can choose to not to do a mortgage stress test, which is the reason some borrowers are disqualified from traditional bank loans.
- Alternative mortgages can be a good option for renewing or refinancing with a different lender if your financial situation has changed since when your current mortgage term started.
- They offer flexible terms, such as short or long amortization periods and low downpayments.
Don’t let the bank decide your future. Reach out to an alternative lender and start exploring your options.
| Mortgage Type | Example Lenders |
|---|---|
| Private Mortgages |
River Rock
Alta West
Fisgard
MCF
For a full list of private lenders, visit our private mortgage lenders page or our private mortgage rates page.
|
| B-Lenders |
MCAP
First National (Excalibur)
Home Trust
CMLS
For a full list of B-lenders, visit our B-lenders page.
|
| Bridge Loans |
TD
Scotiabank
First National
and other Private Lenders and Mortgage Brokers
|
| Reverse Mortgages |
Equitable Trust
Chip Home Equity Bank
|
| Construction Loans |
TD
Scotiabank
First National or Private Lending
and other Private Lenders and Mortgage Brokers
|
| Second Mortgages |
Home Trust
Haventree Bank
Secure Capital
Brookstreet
and other Private Lenders and Mortgage Brokers
|
Get Help Finding a Mortgage Alternative
For a successful home-buying journey, working with a mortgage broker for expert assistance and knowledge can reap more benefits than you doing it alone. Turnedaway.ca has the expertise in handling mortgage applications with alternative lenders gained from more than 30 years of experience.
If you have been turned away by a traditional lending institution because you don’t qualify, the road doesn’t end there. Call us today or apply online and let us show you what 30 years of experience can do for you!
We’re proud to be top-rated among clients in Canada.
Not all lenders provide second mortgages since they come with more risk. But there are usually three options you can explore:
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