DecideGuide
Can you refinance with bad credit or after your bank said no?
A no from your bank isn’t always the end. A banks, B banks and private lenders: what changes (rate, fees, amount) and what improves your chances.
In brief
A no from your bank doesn’t close every door: in our experience as a broker, some lenders agree to refinance even with bad credit (a low credit score). In exchange, the terms often change: a higher rate, fees, a lower amount or a co-signer. Either way, the lender looks at your credit, your income, your debts and the value of your home.
The number to remember
300 to 900
The usual range of credit scores in Canada. A higher score is better: lenders use it to decide whether to lend to you, and at what rate.1
How does it work?
Lenders don’t all see risk the same way. In our practice as a broker, we sort them into “A” and “B” banks, depending on how strict their criteria are, and private lenders. Here’s what each family asks for in return.
Private lenders, in specific cases
A private lender isn’t a financial institution. Its rate is generally higher, it may charge fees to open or close the file and, in general, the loan doesn’t exceed 75% of the home’s value. The Autorité des marchés financiers (AMF), Quebec’s financial regulator, recommends using one only while you improve your situation. Plan how you’ll get out of it before you sign. Broker fees are often added, and your home is the security.4
A no from your bank doesn’t tell the whole story: each lender has its own criteria.
Example
Made-up example
Same home, three ceilings
Nadia’s home is worth $350,000 and she still owes $200,000 on her mortgage. She wants to combine $45,000 in debt. Her bank said no because of late payments.
With an 80% ceiling, $80,000 would be left: $280,000 minus $200,000.
If a bank or credit union judges her file non-conforming, the 65% ceiling leaves $27,500: $227,500 minus $200,000. That doesn’t cover her $45,000 in debt: she then has to look at other lenders, or other solutions such as a consumer proposal.
With a private lender, her $45,000 in debt fits, but the rate and fees are generally higher: compare the total cost, not just the payment. The AMF recommends seeing it as a temporary step.
Made-up example, to show the calculation. The actual ceiling, rate and fees depend on the lender and your file.
What are the downsides, and when isn’t it the right option?
- A higher rate or fees can wipe out part of what you were hoping to gain. Compare the total cost before you sign.
- A private loan often costs more, and its rate could be higher at renewal.
- At banks and credit unions, a loan the lender judges non-conforming, for example because of a low credit score, may be capped at 65% of the home’s value.
- A mortgage broker can advise you not to borrow if your situation doesn’t allow it. Other options then exist, such as a consumer proposal.4 9 10 8
Frequently asked questions
Can you refinance with bad credit?
A no from your bank doesn’t close every door: in our experience as a broker, some lenders agree to refinance even with a low credit score. In exchange, the terms often change: a higher rate, fees, a lower amount or a co-signer.
What is the difference between A banks, B banks and private lenders?
A banks are the major, well-known institutions: their products and rates are competitive, but their credit criteria are often strict. B banks are more flexible in their approval requirements: instead of saying no, a lender may say yes for a lower amount, at a higher rate or with a co-signer. A private lender isn’t a financial institution: its rate is generally higher and, in general, the loan doesn’t exceed 75% of the home’s value.
What do lenders look at before approving a refinance?
Either way, the lender looks at your credit, your income, your debts and the value of your home. At banks and credit unions, a refinance also requires a stress test: the lender checks that you could keep paying if rates went up.
Sources
- Financial Consumer Agency of Canada (FCAC), “Credit report and score basics” (opens in a new tab), consulted on September 25, 2026.
- ZenFi, “Frequently asked questions” (opens in a new tab), consulted on September 25, 2026.
- FCAC, “Getting preapproved for a mortgage” (opens in a new tab), consulted on September 25, 2026.
- Autorité des marchés financiers (AMF), “Les types de prêts hypothécaires” (opens in a new tab) (in French), consulted on September 25, 2026.
- FCAC, “Preparing to get a mortgage” (opens in a new tab), consulted on September 25, 2026.
- FCAC, “Getting your credit report and credit score” (opens in a new tab), consulted on September 25, 2026.
- FCAC, “Checking your credit report for errors and fraud” (opens in a new tab), consulted on September 25, 2026.
- AMF, “Le courtier hypothécaire résidentiel” (opens in a new tab) (in French), consulted on September 25, 2026.
- Office of the Superintendent of Financial Institutions (OSFI), “Residential mortgage underwriting practices and procedures: Guideline (2017)” (opens in a new tab), consulted on September 25, 2026.
- AMF, “Ligne directrice sur l’octroi de prêts hypothécaires résidentiels” (opens in a new tab) (in French), consulted on September 25, 2026.
- AMF, “Prêts hypothécaires” (opens in a new tab) (in French), consulted on September 25, 2026.
Sources checked on September 25, 2026. The examples illustrate a calculation; they don’t promise a result.
This guide gives general information, not advice tailored to your situation. Terms vary from one lender and one file to the next.
This guide is a translation of the French version, which is the reference text.
Groupe ZenFi (9498-0356 Québec inc.), a Quebec mortgage brokerage firm registered with the Autorité des marchés financiers (AMF), client number 3003043028.
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