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Alternative Lenders Canada – When the Big Banks Say “NO”

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.
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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. 

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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. 

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financial advisor explaining reverse mortgage to homeowner

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 solution based on your financial needs.

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.  

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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! 

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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.
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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:

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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:
First National, MCAP, CMLS 
Category
Private mortgage lenders
Smaller banks
Credit Unions
Monoline Lenders A and B-lenders
Examples
Mortgage Investment Companies, Private Mortgage Investors
Equitable Bank, ICICI Bank, Canadian Western Bank
Meridian Credit Union, Alterna Savings, DUCA Credit Union,
First National, MCAP, CMLS
Market Share in Mortgages
1%
5%
14%
9%
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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.

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! 

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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. 

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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!

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    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:  
    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:
    With the right lender, you can get the mortgage you need to buy that house or refinance your home.
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    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. 

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    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.
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    Mortgage Type
    Private Mortgage
    B-Lenders
    Bridge Loans
    Reverse Mortgages
    Contruction Loans
    Second Mortgages
    Example Lenders

    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.

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    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.

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    couple consulting for home equity line of credit

    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! 

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