Published: August 7, 2026

Best Mortgage Broker for Bad Credit Refinance Ontario

If your credit has taken damage and you need to refinance a mortgage in Ontario, the problem usually is not your house. It is that the bank’s underwriting system says no before a human ever reads your file. In 2026 that cutoff sits near a 680 credit score at the big six — and a refinance, unlike a straight switch at renewal, always triggers the full stress test.

That does not end the conversation. It moves it to a different tier of lender. Below is which tier fits which situation, what each one costs in Ontario right now, and how to identify the best mortgage broker for a bad credit refinance in Ontario — the one who can place this file, rather than the one who will spend three weeks discovering they cannot.

Can you refinance a mortgage in Ontario with bad credit?

Yes. Refinancing with a damaged credit score is routine in Ontario as long as you hold enough equity — generally you must retain at least 20% of your home’s appraised value after the new mortgage, because federal rules cap a refinance at 80% loan-to-value.

The distinction that matters is between credit-based and equity-based lending. A bank underwrites your score and income first and treats the property as backup. As you move down the lender tiers that weighting flips, until by the time you reach equity-based lending the property is the primary consideration and the score is close to irrelevant.

So the practical question is never whether your credit is too bad. It is how far down the tiers your file has to travel, and what that tier costs. Both are answerable in a single conversation.

What credit score do you need to refinance with bad credit in Ontario?

There is no legal minimum credit score to refinance in Canada. In practice the big six banks want roughly 680, B-lenders regularly approve in the 500s, and equity-based lenders set no floor at all.

What changes as your score falls is not really your odds of approval — it is which door opens:

• A-lenders — RBC, TD, BMO, Scotiabank, CIBC, National Bank and most credit unions. Typically 680 and up. They weigh your score, verifiable income and debt ratios, and they offer the best available rates.
• B-lenders — federally regulated alternatives such as Home Trust, Equitable Bank and Haventree Bank. Roughly 500 to 680, which is the tier most bad credit mortgage files land in. They weigh the story behind the credit damage, your equity and the stability of your income. Rates sit meaningfully above the A tier and are priced to your risk.
• Equity-based lenders — no score minimum. They weigh equity, how marketable the property is, and whether you have a credible exit. In Ontario, private first mortgages commonly run 6.99% to 11.99% and second mortgages commonly run 9.99% to 14.99%.

Ranges reflect the Ontario market as of August 2026 and vary with loan-to-value, location and file quality. They are not offers.

A 560 caused by one bad year — a separation, a medical leave, a business that closed — reads very differently to an underwriter than a 560 built from eight years of chronic late payments. Same number, different file. The first places at a B-lender with a clear rehabilitation story. The second often does not. That single distinction is the largest thing a broker adds on a bruised-credit refinance, and it is why the same borrower gets different answers from different brokers.

Does the stress test apply when you refinance with bad credit?

Yes, and this catches people out. Refinancing always requires passing the full stress test. The exemption introduced on 21 November 2024 applies only to straight switches at renewal where the loan amount and amortization stay the same.

If you are simply moving your existing mortgage to a new lender at renewal without taking money out, you may skip the test. The moment you pull equity out — through a home equity loan, a HELOC or a straight cash-out — or extend your amortization, it is a refinance and the test applies in full.

OSFI has kept the B-20 qualifying rule unchanged going into 2026, and federally regulated B-lenders apply it too. Some credit unions and non-federally-regulated lenders have more latitude, which is one specific reason a broker’s lender list matters more than their advertised rate.

Bank or broker: which is better for a bad credit refinance?

For a bruised-credit refinance in Ontario a broker is materially better positioned — not because brokers get better rates, but because a bank can only offer you its own single product while a broker can place the same file with the tier that will actually approve it.

When a bank declines you, you have learned one thing: that bank said no. You have not learned whether the file is placeable. Those are very different pieces of information, and the second is the one you need.

The other difference is packaging. Bruised-credit files are approved or declined largely on how clearly the narrative is presented — what caused the damage, whether it is resolved, and what has stabilised since. Underwriters at alternative lenders expect imperfection. What they will not accept is an unexplained mess.

What makes the best mortgage broker for a bad credit refinance in Ontario?

Choose on lender access, tier experience and fee transparency — not on advertised rates. A broker who cannot tell you which tier your file belongs in during the first conversation is guessing.

Five questions worth asking before you hand over any documents:

• Which tier does my file realistically land in? Someone who has placed files like yours answers quickly and specifically. Vagueness usually means the plan is to submit to a bank, collect a decline, and work it out afterwards on your timeline.
• What is your fee, and when is it payable? On A and B-lender deals the lender compensates the broker and you pay no broker fee. On equity-based deals a broker fee is normal and standard in Ontario. It must be disclosed in writing before you commit. Reluctance to do that is disqualifying.
• What is the plan to get me back to a better tier? An alternative mortgage should be a bridge, not a destination. A competent broker maps the exit before you sign the entrance.
• Are you licensed, and where? Every Ontario brokerage is licensed by the Financial Services Regulatory Authority of Ontario, and the licence number is verifiable on FSRA’s public register in under a minute. Check it.
• Have you handled files in arrears or power of sale? If your refinance is time-sensitive, this stops being a general mortgage question. Ontario power of sale moves on statutory timelines and a broker who has not worked mortgage arrears files will not know how fast they need to move.

Should you roll high-interest debt into your mortgage?

If you are carrying credit card or unsecured loan balances, this is often the strongest reason to refinance at all. Consumer debt is unsecured and priced accordingly — frequently around 20% or higher on cards. Mortgage debt is secured against your home and priced far lower. Moving the balance from one to the other can cut the monthly cost substantially.

The mechanics are simple. You refinance for more than your current mortgage balance, and the difference pays out the high-interest debt. You are left with one payment at a mortgage rate instead of several at consumer rates. For most homeowners the monthly saving is the headline, but there is a second benefit that matters if you are trying to repair credit: paying off revolving balances drops your credit utilization, which is one of the largest single inputs into a credit score. Debt consolidation for homeowners covers this in more depth.

It is not only credit cards. Two other balances are consolidated the same way and are often more urgent, because both create a claim that can sit ahead of your mortgage. Property tax arrears form a priority lien against the home, which is why lenders treat them seriously and why clearing them is frequently a condition of approval. Income tax and CRA arrears behave similarly once CRA registers a lien, and unlike a credit card the balance keeps compounding while collection powers escalate. Both can be rolled into the same refinance as the consumer debt.

Two conditions have to hold. You need enough equity to stay within the 80% loan-to-value cap after the consolidation, and the new mortgage has to pass the stress test.

Be clear-eyed about the trade, though. The payment falls partly because the debt is now spread over a much longer amortization. Unless you keep paying at something like the old rate, you can pay more total interest over the full term even at a far lower rate. A good broker will show you both the monthly number and the lifetime number. You can model it yourself with the debt consolidation calculator.

If the prepayment penalty makes refinancing expensive, do not abandon the idea — change the structure. A second mortgage sits behind your existing first, so the low rate and remaining term on that first mortgage are untouched and no penalty is triggered. You still consolidate the high-interest debt; you simply do it alongside the existing mortgage rather than by replacing it. The second carries a higher rate than a refinance would, so the right answer depends on the size of the penalty versus the rate difference. That is an arithmetic question, and it should be answered with your actual numbers before you choose either route.

What does refinancing with bad credit actually cost in Ontario?

There are three cost layers: the interest rate, any lender and broker fees on equity-based deals, and third-party costs — legal work of roughly $1,500 to $3,000 and an appraisal of roughly $300 to $500. A and B-lender refinances typically carry no broker fee to the borrower, and every fee must be disclosed to you in writing before you commit.

The number that decides a surprising share of files is none of those. It is the prepayment penalty on your existing mortgage. If you are three years into a five-year fixed at a low rate, breaking it can cost more than the interest you would save.

In that situation a second mortgage behind the existing first is frequently the cheaper structure, even though its headline rate is higher, because the low first mortgage stays intact. Any broker who does not run that comparison for you is not doing the job.

What if you are already behind on payments?

A refinance is still possible if you are in mortgage arrears or facing power of sale, but the timeline drives everything. Equity-based lenders can fund in days rather than weeks specifically for this situation.

Ontario uses power of sale rather than the judicial foreclosure process used in Alberta. The practical consequence is that it moves considerably faster than most homeowners expect, and the costs — legal, administrative and accrued interest — are added to what you owe as the process advances. Acting in month two is a fundamentally different financial event than acting in month five.

The mistake we see most often is waiting for credit to improve before calling. Credit does not improve while you are in arrears, and equity does not wait either.

Frequently asked questions

Can I refinance in Ontario with a 500 credit score?
Often yes, provided you retain at least 20% equity after the refinance. A 500 score generally rules out the big six but sits within normal B-lender territory, and equity-based lenders apply no score minimum.

How much equity do I need to refinance in Ontario?
You must retain at least 20% of the appraised value, because refinances are capped at 80% loan-to-value. On a $700,000 home that means total mortgage debt of no more than $560,000.

Will refinancing hurt my credit score further?
A refinance involves a hard credit inquiry, which typically causes a small temporary dip. If it consolidates high-interest revolving debt, the drop in credit utilization usually outweighs the inquiry within a few months.

Can I refinance after a consumer proposal or bankruptcy?
Yes. Many B-lenders will consider a file once a proposal or bankruptcy is discharged, and equity-based lenders will often consider one that is still active. Discharge paperwork and evidence of stability since are the key documents.

How long does a bad credit refinance take in Ontario?
B-lender refinances commonly take two to four weeks. Equity-based refinances can close in days when the situation is urgent, which is why they are the usual tool in arrears and power of sale files.

Is a second mortgage better than refinancing with bad credit?
Frequently yes, specifically when your existing first mortgage carries a low rate and a significant prepayment penalty. A second costs more in interest but preserves the cheap first, and the total cost is often lower. This should be modelled, not assumed.

Written by Parm Mehmi, licensed mortgage broker and founder of CreditReboot Mortgages. FSRA #13163 | FCAA #511322. Licensed in Ontario, Alberta & Saskatchewan.