Who typically uses a B lender
Self-employed borrowers with hard to verify income, people with past credit issues like a consumer proposal or bankruptcy, and those who need debt ratios slightly outside standard guidelines are common candidates for B lender financing.
How B lender terms typically differ
Rates from B lenders are generally higher than bank rates, terms are often shorter, usually one to two years, and there may be a lender fee added to the mortgage. These tradeoffs come with more flexible qualification.
- Rates typically higher than A lenders
- Shorter terms, often one to two years
- Lender fees are common and should be factored into cost
The role of a B lender in a bigger plan
Many borrowers use a B lender as a short term bridge, working on improving their credit or documenting income over a year or two before qualifying with a traditional bank at renewal time.
How to prepare if you think you'll need one
Being upfront about your financial situation with your broker early on helps identify whether a B lender is genuinely necessary or if there are still A lender options worth exploring first.
Frequently asked questions
- Do I need a bigger down payment for a B lender mortgage?
- Many B lenders require a larger down payment than the minimum for insured mortgages, often in the range of 20 percent or more depending on the file.
- Can I switch from a B lender to a bank later?
- Yes, many borrowers use a B lender temporarily and switch to a traditional bank once their income documentation or credit has improved.
- Are B lenders regulated in Canada?
- Yes, B lenders are regulated financial institutions, though they operate under different guidelines than the major banks when it comes to qualification criteria.