Bad Credit Mortgage in Canada: What You Can Still Get, and From Whom
A bruised credit file is not a decline, it is a different lender. Here is what Canada borrowers with collections, missed payments or a past bankruptcy can realistically expect.
Who a bad credit mortgage covers
- Scores below roughly 600, where A lenders stop looking
- Discharged bankruptcy or consumer proposal within the last two years
- Collections, judgements or a run of late payments on the bureau
What lenders look for on a bad credit mortgage file
| Score above 680 | Every A lender. You are not a bad-credit file and should not be priced as one. |
| 600 to 680 | Most A lenders still, though some price a premium or want a larger down payment. Worth shopping hard before accepting alternative pricing. |
| Below 600 | Alternative (B) lenders. Typically 20% down, a lender fee of about 1%, and a one or two-year term while the file is repaired. |
| Recent bankruptcy or proposal | Alternative lenders want it discharged with two years of re-established credit. Private lenders will look sooner, at a price. |
Bad Credit mortgage rates: what it costs
Alternative lending in Canada generally runs two to four points above prime pricing, plus a lender fee. The point of the term is to repair the file and refinance onto a prime shelf in a year or two — not to stay there.
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Bad Credit by province
Land transfer tax, minimum down payment and typical prices differ by province.
Where a bruised-credit file is placed, and what each tier costs
Credit is a threshold, not a verdict. What changes with the score is which tier will look at the file and what that tier charges.
| A lender | B / alternative lender | Private lender | |
|---|---|---|---|
| Credit expected | Generally 680 and up for the best pricing. At least one borrower typically needs 600 for default insurance. | Lower, and recent problems can be explained. | Largely irrelevant. |
| What else matters | Provable income and the stress test. | Down payment, income, and the story behind the credit. | Equity in the property. |
| Relative cost | Lowest. | Higher, usually with a lender fee. | Highest, with a broker fee disclosed in writing. |
| Typical term | One to five years. | One to three years as a stepping stone. | Often one year. |
| Best for | A file that already qualifies. | A borrower who can repair credit inside a term or two. | A short, specific problem where equity is the answer. |
The point of the second and third tiers is to be temporary. Any file placed there should have a written plan for getting back to an A lender.
Bad Credit mortgage questions
What score do I actually need?
For prime pricing, roughly 680. Most A lenders have a floor around 600 for insured deals. Below that you are looking at alternative lenders, where the property and the down payment matter more than the score.
Will applying hurt my credit further?
A broker can tell you where you stand before anything is submitted. A hard inquiry only happens when a file goes to a lender, and shopping several lenders inside a short window is generally treated as one inquiry by the bureaus.
How do I get back to a normal rate?
Two years of clean payment history is usually enough. The alternative mortgage is the bridge, which is why these are written on short terms — the exit is the plan, and it should be discussed the day the file is placed.
Will applying hurt my credit score?
A single mortgage enquiry has a small, short-lived effect. Several lenders pulling your bureau separately over weeks is worse than one broker pulling it once and taking that file to several lenders.
How long does this usually take?
A straightforward file takes a few weeks from application to approval. Alternative and private lending can move faster because less is being verified — sometimes days.
Have a bad credit file looked at
When you are ready to do something with these numbers, we will introduce you to a licensed broker who can put the file in front of lenders. Nothing here obliges you to.
