Bad Credit & Alternative Lending

What is Alternative Lending:


There are generally three different types of lending institutions in Canada, all with their own set of policies, regulations and products that address different client profiles for their residential mortgage needs.

  • AAA lenders: Big Banks, Credit Union, Mortgage Finance Companies & Trust Companies
  • B Lender / Alternative Lenders
  • Private Lenders

A-Client fits within certain policy framework (Clients are eligible for lowest rates in the market, no other fees):

  • Down payment for purchases can be as low as 5%, an insured mortgage (refinance 20% equity or higher).
  • Min 620+ credit score with established credit.
  • Must qualify within 39%/44% debt servicing ratios & maximum amortization of 30 years.
  • Employees must prove income with job letter and pay stub.
  • Self-employed/commissioned must show prior two years average net income on tax documents to qualify, ie. Line 150.
  • Must be fully discharged from prior bankruptcy or consumer proposal for at least two full years and with re-established credit after discharge.
  • Large lending area across Canada.
  • No additional fees

B-Client fits within certain policy framework (Clients are eligible for good rates, generally starting at 1-2% higher than “A” lending rates, additional fees apply):

  • Must have 20% down payment or refinancing min 20% equity (Alt Lending is uninsured – cannot be insured under 20%).
  • No minimum credit score required.
  • Extended debt servicing ratios – up to 60%+ GDS/TDS for purchase or refinance & maximum amortization of 40 years.
  • Rural property with well and septic may not qualify for the minimum 20% equity or down payment, may require 35% LTV.
  • Different method of income qualification for self-employed and commissioned income VS tax documents with A-Lender.
  • Higher rental offset calculation – helpful for middle income people to grow real estate investment portfolio.
  • Do not go into consumer proposal if you have equity in your home, and your bank or CU decline you.  Refinance and payout your unsecured debts with an Alternative Lender.  We can also refinance someone currently in consumer proposal and help double bankruptcy applicants either refinance or purchase property.
  • Can purchase property in HOLDCO’s.
  • Policies above greatly extend affordability for refinances or purchases, helping acquire assets or keep someone in their home.
  • Population centres above 5,000 only, and many B-Lenders require minimum population of 50,000.
  • Additional fees apply

Private Lending client fits within certain policy framework (Private lending rates generally start at 4% higher than “A” lenders, additional fees apply):

  • 1st, 2nd & 3rd mortgages.
  • Must have 20% down payment or refinancing min 20% equity (Private Lending is uninsured – cannot be insured under 20%).
  • No minimum credit score required.
  • No income confirmation required.
  • No debt servicing ratio guidelines.
  • Straight equity lending – make your payments or Power of Sale process is started on the subject property.
  • Population centres above 5,000 (case by case)
  • Additional fees apply


How Does A Bad Credit Mortgage Approval Work?

The main focus is on the equity and marketability of your property.  Alternative lending is based on common sense lending where you can show that you have enough equity in your real estate and can show cash flow to be able to afford the mortgage payments.

We can help with bad credit loans in St. Catharines, Niagara Falls, Welland, Port Colborne, Fort Erie, Greater Niagara and Southern Ontario.  Yes, we can give you, home mortgage refinance solutions and home mortgage help throughout Ontario.

Many of our clients experience setbacks in their lives and have too much high payment debt that is hurting their cash flow and a way of life. With the high interest rates charged on their credit cards, often in the range of 19% to 28%, they have difficulty making minimum monthly payments. Usually, never paying down any principal owing.

There are many reasons good people get in over their heads financially — loss of job, business failure, divorce, serious illness, car accidents, bad spending habits, bankruptcy and more.

If this is you, don’t worry, you are not alone.  It’s life — alternative mortgage refinances can help end credit card debt and improve your situation.  We work with you to ensure you’ll get a fresh start.

8 Reasons To Call Us For Bad Credit Equity Loans

  1. If you have enough equity in your real estate, the property is marketable and you can afford the monthly payments — we’ll do our best to get your mortgage with bad credit approved, promise!
  2. We’ll give you the respect you deserve regardless of your credit.
  3. We will not judge you but help you rebuild financially.
  4. You’ll get the best long term mortgage solutions to financial recovery.
  5. You’ll get quick turnaround and practical advice.
  6. We’ll help you to repair your credit.
  7. We’ll walk you through the mortgage application process from start to successful closing.
  8. And, you’ll get fast and friendly service.

Second Mortgage Loans

A second mortgage is an additional loan taken out on a property that is already mortgaged. For the lender, this is more risky than the first mortgage, because they are in second position on your property’s title. If the homeowner defaulted on their payments and the property was taken into possession, the lender in first position would always be paid out first, whereas the lender in second position runs a higher risk of not being paid out in full. To compensate for this additional risk, mortgage rates for second mortgages are always higher than for principal mortgages.

For individuals with an existing mortgage, who have good credit and more than 20% equity in their homes, the most affordable second mortgages will be in the form of a home equity line of credit . However, if the homeowner has weaker credit and/or little equity in their property, a second mortgage through a trust company or private lender would be required.

Why Would I Need A Second Mortgage And How Do I Qualify?

A second mortgage can be a great way for homeowners to consolidate debt. Though second mortgages often carry higher interest rates than first mortgages, these rates are still often lower than high interest credit cards, car lease payments or unsecured lines of credit.

If you use a second mortgage to consolidate debt and help you meet other financial commitments on time, this can improve you credit score and allow you to qualify for a mortgage with a prime lender sooner.

In order to qualify for a second mortgage in second position, lenders will look at four areas:

  • Equity. The more equity you have available, the higher your chances of qualifying for a second mortgage will be. If you are purchasing a house, a larger down payment also decreases the risk that a lender takes on. Regular payments towards utilities, telecommunications, insurance, etc, and/or confirmation letter from service provider(s).
  • Income. Lenders want to verify that you have a dependable source of income, to ensure that you can make payments.
  • Credit score. The higher your credit score, the lower your interest rates.
  • Property. Because other factors are risky (i.e. your credit score), lenders need to secure their investment in case you are unable to keep up with mortgage payments.

Contact me today for more information!

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