B lenders and alternative mortgage lenders in Canada
B lenders: also called alternative mortgage lenders, are regulated institutions, usually trust companies and smaller lenders, that approve mortgages the big banks decline: self-employed income that does not show on a tax return, a recent credit problem, or a property or debt load outside prime rules. They charge more than an A lender and much less than a private one.
The alternative lenders listed here describe their own lending areas. Most B lenders deal with borrowers only through mortgage brokers, so a broker who knows their rulebooks is normally how you reach one.
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Are you a lender? List here freeA lender vs B lender vs private lender
A lenders are the banks, credit unions and prime lenders. They offer the lowest rates, apply the federal qualifying rules strictly, and want clean credit and documented income. B lenders sit in the middle: they will look at stated or bank-statement income, lower scores and recent credit events, in exchange for a higher rate, a larger down payment or equity requirement, and usually a lender fee.
Private lenders are beyond that again, lending mainly on equity at a much higher cost. Each step down the ladder costs more, so the aim is always the highest tier that will approve the file, and a clear route back up.
What a B lender mortgage costs
Expect a rate above prime lenders, a lender fee, and in some cases a brokerage fee, all disclosed in writing before you sign. Terms are often shorter, one to three years is common, because the plan is usually to move back to an A lender once the reason for the B file has passed.
The pricing reflects the file. A strong down payment, a recent but explained credit event, or two years of clean business banking will price better than a thin file with several problems at once.
Why most people reach a B lender through a broker
Alternative lenders built their business on the broker channel and many do not have branches or take applications from the public. Their rules also differ from one another in ways that decide approval, how they read self-employed income, how recent a credit event can be, which property types they avoid.
A broker submits one application to the lender whose rules fit, instead of you applying to several and collecting credit inquiries. On B lender files the broker may also charge a fee; if so, it must be disclosed before you commit.
Common questions
What is a B lender?
A regulated lender, often a trust company, that approves mortgages outside bank rules, stated or bank-statement income, lower credit scores, recent credit events or higher debt loads. It charges a higher rate and usually a lender fee, and most B lenders work only through mortgage brokers.
Are B lenders regulated?
Most are. Many are federally regulated trust companies or banks overseen by OSFI; others are regulated provincially. You can check a federally regulated institution on OSFI’s public list, and a brokerage on the provincial regulator’s register. Listings here are self-reported and not checked by this site.
Is a B lender better than a private lender?
For almost every borrower who can qualify, yes. A B lender is cheaper, offers longer terms and follows a published policy. Private lending makes sense only when no B lender will approve the file, or cannot close in time.
How long do you stay with a B lender?
Usually one term, often one to three years, while the reason for the B file, a credit event, a new business, a high debt load, settles. The term should be chosen with the move back to an A lender in mind, and it is worth asking what has to be true for that to happen.
Can you go directly to a B lender?
Occasionally, but most alternative lenders only accept applications through mortgage brokers. Even where direct applications are possible, a broker can compare several B lenders’ rules against your file with a single credit check.