People with bad credit have options when it comes to getting a mortgage. For a mortgage from a big bank in Canada, you need a minimum FICO score of 600. With scores below 600, most banks will decline you for a mortgage loan.
If you don’t meet the minimum credit score, you’ll have to look for an alternative lender or B lender. These B lenders, work mostly with people that do not have awesome credit scores.
For the toughest deals we use Private lenders. We use privates usually for the easiest approval, but require the most amount of equity and have the highest rates.
Category’s of Canadian Mortgage Lenders
| Major Banks – Prime Lenders | Financial institutions, including the big banks with more conservative lending requirements. | 600-900 | Best! | Scotiabank |
| B Lenders | Financial institutions catering to those with bad credit | 500-700 | Best rate + 1-2% typically | MCAP Eclipse |
| Private Lenders | Private companies or individuals who loan funds backed by real estate properties | <500 | 8%+ | VWR |
If you work with a B lender, you’ll most likely pay some extra fees:
- Your B lender may charge a loan processing fee of up to 1% of the mortgage’s value.
- Typically we also charge a fee usually around 1%. This fee is charged because lenders don’t typically compensate mortgage brokers for tough mortgage clients, this cost is passed along to you.
When placing a mortgage with a B side lender, we always coach. There is no reason why a client should sit in a high rate for an extended period of time. Typically, after two to three years we pull most of these clients back to a regular A side lender.