B Lender Mortgage Rates

B lender mortgage rates Ontario

B lender mortgage rates can range anywhere from regular big bank rates to about 2.5% higher than big bank mortgage rates, depending on the application. There are different features and flexibilites among lenders, so it is important that an experienced mortgage broker try all b lender options for the best deal.

Contrary to some thinking, b lender mortgage rates are not defined as non bank lenders or Mortgage Finance Companies. While non bank lenders such as MCAP, First National and CMLS are not as large or widely marketed as the big banks in Canada, these non bank institutional lender types comply with the same Federal regulation (B-20 underwriting guidelines) as the big banks and often offer lower mortgage rates and better fine print quality/flexibility. 

So then, what is a b lender and who are the leading b lenders in Canada?

What is a B lender?

A b lender is an alternative mortgage lender for applications that dont fit the standard big bank approval guidelines. B lender approval flexibility includes a higher lending limit, lower credit scores and income that may not be as easy to prove. Typically a b lender mortgage is used as a ‘stepping stone’ for a short period of 1-3 years, to help graduate into a lower mortgage rate.

To understand what a b lender is, it helps to know the 3 main types of lending in Canada: ‘A’,’B’ and ‘C’ lending.

‘A’ lending is also known as prime rate or ‘lowest rates’ lending. This lender type is for borrowers with good credit, and does not require much lender flexibility or creativity to approve the mortgage. The big banks, credit unions and mortgage finance companies (MFC) typically fall into this category.

‘C’ lending is essentially private lending. The private lender could be an individual lender/ investor or a Mortgage Investment Corporation (MIC). A MIC is an institutional lender that pulls funds together from investors and lends them out. The private lenders mainly rely on down payment or equity available, and credit or income may not be relevant for approval. The private or C lender mortgage rates are the highest.

B lender mortgages are mid-way between A lending and C lending. B lenders provide much more flexibility than a traditional A lender. This flexibility includes:

• Increasing borrowing limits.
• Lending with bad credit scores, including post bankruptcy.
• Can lend to pay out CRA (A lenders typically dont)
• Lending where income is harder to show (for example, shown on bank statements primarily)
• A combination of the above.

At the same time b lender mortgage rates are lower than C lender/ private mortgage rates. Because there can be so much variation and degrees of risk within b lender mortgage applications, b lenders typically have a rate range to correspond with the risk level. We show the main b lenders in Canada just below, along with approximate mortgage rates and ranges.

(show a,b,c lender comparison photo)

TIP: It can be essential to select the right b lender because we want to ensure lower rates are available if the mortgage needs to be renewed with the existing lender. Some lenders are much better at renewal time than others. 

B lender FAQ

What determines my b lender mortgage rate?

Down payment/ equity, credit score, income are risk factors and are priced into the rates.

The down payment minimum for a b lender mortgage is 20%. As the down payment available increases from this point, this can lower the mortgage rate because it reduces lender risk.

Credit scores can be lower than 650 or impaired, however b lenders will ask questions about why the credit is damaged to help determine if there may be continued lower score. The lower the credit score, the higher the rate. If the score is good (higher than 680), the rates may be similar to A lender, prime mortgages. If the credit score is bad (under 600), rates may be closer to private lender, C mortgage rates.

If income can be shown using a paystub or 2 years of tax returns, the rates will likely be lower. However, if income is ‘stated’ and, for example, bank statements are used to determine cash flow, then this can add a risk premium to the rate. 

How do I qualify for a b lender mortgage?

Qualifying for a b lender mortgage can be easier than applying for a traditional bank mortgage, especially if credit is not too bad and substantial equity is built up in the home. A standard mortgage application and supporting documents are required to get approved from a b lender.

How can I lower a b lender mortgage rate? 

The easiest way is to work with an experienced mortgage broker to shop the application around the market. Even without any changes to the application, the rates lenders offer will vary. Sometimes it’s possible to make small application changes that will help to lower the rate as well. For example, if it might be easy to increase credit by 50 points quickly, this could help reduce the mortgage rate. 

Finally, and maybe most importantly, the b lender mortgage is typically used as a stepping stone and can be refinanced with a lower rate, A type lender at the end of the term.

What are the b lender fees?

Typically B lenders charge lender fees in the 1% – 2% range and this fee can be bundled into the principal mortgage amount. Along with shopping for rate, an experienced mortgage broker will work with you to help ensure b lender fees are the lowest possible.