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Refinance a Mortgage With Bad Credit

refinance a mortgage with bad credit

Refinance Your Mortgage With Bad Credit

Refinancing a mortgage can help you consolidate debt and lower your current monthly payments on all debts. At the same time, consolidating debt can also help you improve your credit score. When you’re looking to refinance a mortgage with bad credit, even though things might be a bit more complicated, you still have a few options available to you. 

So if you are wondering how to refinance a mortgage with bad credit, weighing out these options can help you determine what’s available to you.

Refinancing With Your Bank

The first stop on your way to refinancing is generally the current bank you are with. When you want to refinance a mortgage with bad credit, this may become difficult depending on what institution you use in Canada. 

Banks are required to underwrite mortgages on B20 risk guidelines. These guidelines require credit and debt servicing ratios along with a qualifying rate, which can disqualify borrowers that may have qualified a year ago.

Refinancing With a B-mortgage Lender

If you are close to the renewal of your 1st mortgage, are looking to refinance, and have bad credit, a b-lender has products enabling homeowners to consolidate debts with lower credit scores and income types. 

When working with b-lenders, expect rates to be higher than those practiced by conventional mortgage lenders like banks. But where banks fall short, b-lenders fill a gap. Generally, b-lenders are used for shorter term loans like 2 or 3 years.

Refinancing With a Home Equity Lender Or a Private Lender

Home equity lenders allow homeowners with enough home equity to refinance their mortgage even when dealing with bad credit

Equity lenders provide 1st, 2nd and 3rd mortgages to homeowners in BC, regardless of their credit rating, and they can even help people with poor credit or no income verification. They also offer home equity loans, which in some cases can be a cheaper alternative than refinancing your entire mortgage

Other than home equity loans, these types of lenders also offer 2nd mortgages, which are, in most circumstances, a far cheaper alternative than refinancing a bad credit mortgage as a 1st mortgage.

When holding a 1st mortgage, you have qualified for this mortgage at a great rate. In a market where rates are going up, it is usually better to hold most of the mortgage at the best rate possible and obtain a 2nd mortgage to consolidate all the bad credit and other debts.

Using a blended rate calculator can help you determine savings.

If you are interested in learning more about how to refinance a mortgage with bad credit, don’t hesitate to get in touch. We have a list of some of the best private lenders in BC, Canada, and can offer you the best advice on mortgage options, including alternative mortgages and home equity loans.

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2 Comments

  • Wade says:

    Hello, I just received a letter of demand from. Lawyer to bring mortgage up to date. Just under 12,000 dollars. I havE until March 6th to pay. I had a second mortgage loan last year. Hopefully I am able to get a loan for the amount needed to save my home! Starting work next week, was out of work which is. Why payments fell behind. I owe bank 471,000, and other loan is about 30,000. The property is worth 600,000 or bit more. I’m I. Mission bc. Hopefully there is help somewhere?

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