Bad Credit Mortgage Refinance in Ontario: A Step-by-Step Guide (2026)

Refinancing your mortgage with bad credit in Ontario isn’t as impossible as the banks make it sound. Thousands of Ontario homeowners with damaged credit successfully refinance each year — they just don’t go to the same lenders that advertise on TV.

This guide walks you through exactly how to do it, step by step.

Step 1: Understand Why You Were Declined

Big banks (TD, RBC, Scotiabank, CIBC, BMO) use automated underwriting. Your file is scored on: credit score, income documentation, stress test qualification, and debt-to-income ratio. If any one of these fails, you’re declined — period. Most bad credit refinance applicants fail the credit check.

Step 2: Pull Your Credit Report

Get free credit reports from both Equifax and TransUnion (annualcreditreport.com or directly through each bureau). Review them carefully for:

  • Errors or accounts that don’t belong to you
  • Accounts that should be showing as paid but aren’t
  • The exact events damaging your score (collections, late payments, judgments)

Step 3: Know Your Equity Position

Contact a mortgage broker and get a property valuation. Calculate: Home Value × 80% − First Mortgage Balance = Available Equity. If you have enough equity (typically $50,000+), you are likely refinanceable regardless of credit score.

Step 4: Work With a Broker Who Accesses B-Lenders and Private Lenders

This is the single most important step. A broker like CreditReboot has access to 50+ lenders, including B-lenders like Home Trust and Equitable Bank, and private MICs (Mortgage Investment Corporations). These lenders underwrite based on property equity, not just credit score.

Step 5: Submit Your Application

Your broker will collect: recent mortgage statement, property tax bill, 2 years of T4s or NOAs (or bank statements if self-employed), photo ID, and void cheque. The broker submits to multiple lenders simultaneously to find the best approval.

Step 6: Review Your Offer

Bad credit refinance offers will be at higher rates than A-lender products — typically 5.99%–9.99% for B-lenders and 9%–14% for private lenders. Evaluate: interest rate, lender fees, broker fees, prepayment penalties on your current mortgage, and total cost of refinancing.

Step 7: Close and Rebuild

Once approved, a real estate lawyer handles the refinance closing (typically 10–14 days). Use this opportunity to: consolidate high-interest debt, free up cash flow, and build a plan to restore your credit score over the next 1–2 years so you can transition to an A-lender.

Typical Costs of a Bad Credit Refinance in Ontario

  • Lender fee: 0–2% of loan amount
  • Broker fee: 1–2% of loan amount (varies by lender)
  • Legal fees: $1,200–$2,000
  • Appraisal: $350–$600
  • Mortgage break penalty: Varies — can be significant on fixed-rate mortgages

Ready to Get Started?

If you’ve been turned down by the banks or are struggling with your current mortgage situation, CreditReboot Mortgages is here to help. We work with homeowners across Ontario with bad credit, consumer proposals, bankruptcies, self-employment, and more. There’s no minimum credit score — just real home equity solutions.

Call us today at 1-866-329-8801 or visit www.creditreboot.ca to get a free, no-obligation consultation.

Licensed in Ontario, Alberta & Saskatchewan.

FSRA #13163 | FCAA #511322

Don’t let a bank’s decision be your final answer.