Which Lender Tier Fits Which Credit Profile
Ontario's mortgage market isn't one door — it's three. Each tier serves a different credit profile, and there is a tier for every score:
| Your Credit Profile | Best-Fit Tier | What They Look At |
|---|---|---|
| Score around 680+ | Banks and credit unions (A lenders) | Full income documents, clean recent history |
| Score roughly 600–680 | B lenders and credit unions | The story behind the score, flexible income proof |
| Below ~600, or recent credit events | Equity-based private lenders / MICs | Home equity first — any score can work |
A MIC (mortgage investment corporation — a pooled fund that lends on real estate) and other private lenders approve mainly on home equity, the part of your home's value you actually own. With enough equity, the score itself stops being the gatekeeper.
Important: these score bands are guides, not verdicts. Files near a boundary can land in either tier depending on equity, income, and how recent the issues are — which is exactly what the next section covers.
What Actually Matters More Than the Number
A bank's computer sees one number and stops. The lenders in the other tiers use human underwriters — people who read the whole file. Four things routinely outweigh the score itself:
This is why the same score gets a no at one lender and a yes at another. An underwriter reading why your credit dipped — and what's changed since — makes a different decision than a computer that only sees the dip. Presenting that story well is a licensed mortgage agent's job.
What It Costs by Tier — the Honest Numbers
You deserve the real math up front, not at the lawyer's office. Here is what each tier typically costs:
| Tier | Rate | Fees | Typical Term |
|---|---|---|---|
| Bank (A lender) | Lowest | Usually none | 1–5+ years |
| B lender | About 1–2% above bank rates | Lender fee ~1% of the mortgage | 1–3 years |
| Private / MIC | Higher — always quoted as a range for your file | Lender fee ~2–4% plus a brokerage fee, all disclosed in writing | Usually 1 year |
All figures are estimates and vary by file — your licensed mortgage agent puts your exact numbers in writing before anything is signed, with no fee ever appearing for the first time at closing. And here's the frame that matters: the premium is temporary. You're not signing up for these costs forever — you're buying a yes today and a bridge back to bank rates, usually within 12–24 months.
After a Consumer Proposal or Bankruptcy
A consumer proposal (a legal arrangement to settle debts for less than the full amount) or a bankruptcy is a reset, not a life sentence. Millions of Canadians have been through one, and lenders in the alternative tiers work with these files every week.
- B lenders: once the proposal or bankruptcy is discharged (formally completed), they typically want to see 1–2 years of re-established credit — one or two new accounts, every payment on time. That's the evidence the rough patch is behind you.
- Equity-based private lenders: can fund sooner — sometimes right after discharge, or even while a proposal is still open — because they lend on your home equity rather than your credit history.
Which path fits depends on your timeline and your equity. If you can wait and rebuild, the B-lender route costs less. If you need to act now — a purchase closing, a renewal your bank won't touch, debts to consolidate — a short private term keeps things moving while your credit recovers. Neither path requires explaining yourself to anyone who hasn't heard it all before.
The 12–24 Month Rebuild Roadmap
An alternative mortgage is a bridge, not a destination. The whole point of paying the premium is to exit it. Here's the concrete plan, starting today:
- Every payment on time, from today. Payment history is the biggest driver of your score, and lenders weigh the most recent months heaviest. One clean year changes everything.
- Keep card balances under 30% of their limits. A $3,000 balance on a $10,000 limit reads as healthy; a maxed-out card drags the score even when payments are on time.
- Open a secured credit card if you need to. If past issues closed your accounts, a secured card (backed by a small deposit you provide) rebuilds history with almost no risk of another no.
- Don't apply for scattered new credit. A burst of applications signals stress to the scoring models. One or two well-chosen accounts, managed cleanly, beat five new ones.
- Refinance back to a bank at renewal. When the term ends, your licensed mortgage agent re-shops the recovered file to the banks — and the premium ends there.
This exit-first framing is also how Ontario's regulator expects alternative mortgages to be recommended — with a documented plan back, not an open-ended stay. Your file should have its exit strategy written down on day one.
How RATECORE Helps
RATECORE is a comparison platform, not a lender. Tell us your situation once — about two minutes, with no credit check — and we match you with a licensed mortgage agent (Level 2 licensed where private lending is involved) who knows which tier fits your exact profile, presents your story to the right underwriter, and puts every cost in writing before you decide anything.