First National is a subprime mortgage lender offering mortgage solutions for Canadians. Their focus on providing mortgages for customers who may not qualify for traditional mortgages is crucial as more and more Canadians struggle to make ends meet.

As people across the country try to survive a changing income, poor credit history, and other financial challenges, B lenders like First National are stepping up to provide flexible mortgage offerings. As subprime mortgages continue gaining popularity in Canada, staying informed about different lenders and comparing your mortgage options is essential.

Read more about subprime mortgages

What is a B Lender?

Banks are picky when it comes to mortgage approvals. There are many barriers to approval, like your work history, credit score, or other aspects of your financial past.

Having a good credit score and solid employment won’t always result in a mortgage approval. The struggle is even greater for those who are self-employed, seasonal workers, or don’t have a good credit score. Luckily, B lenders, also called subprime mortgage lender, can help Canadians from all walks of life achieve their dream of owning a home. 

A tip about knowing your credit score

Many Canadians don’t know their credit score and are shocked when they go and apply for a financial product and get refused. You can check your credit score with TransUnion or with Borrowell. Once you know your score, you can take steps to improve it.

Specialized mortgage products

B lenders have specialized mortgage products that cater to customers with fluctuating income, poor credit scores, or other unique financial situations. Unlike banks, which are regulated through the Office of the Superintendent of Financial Institutions (OSFI), B lenders are considered private financial institutions and face less strict regulations.

This distinction means subprime mortgage lenders can bypass the bank’s strict criteria for mortgage approval, like the mortgage stress test, and help more Canadians buy a home. 

Although subprime mortgage lenders are crucial in enabling more Canadians to buy a home, there are some risks associated with their services. Consequently, the strict criteria for approval that most banks adhere to can be frustrating.

However, but they also ensure that borrowers will be able to pay back their mortgage and avoid defaulting on their loan. Without criteria like the mortgage stress test, there is a higher chance that borrowers will default on their loan if they face a loss of employment or skyrocketing interest rates.

Most subprime mortgage lenders charge higher interest rates than big banks to compensate for the risk of loan defaults that B lenders face. Interest rates aren’t the only thing to consider when looking for a mortgage lender, but it is good to understand your options before signing with a mortgage provider. Mortgage comparison tools can help you weigh the pros and cons between B lenders and traditional lenders like the Big Six.

Who is First National?

First National is a Canadian private lending company focused on issuing mortgages in Canada. They are the most prominent non-bank provider of residential mortgages in the country. Here is a quick breakdown about them:

  • Based in Toronto
  • First National has over 1600 employees with offices in Calgary, Vancouver, Halifax, and Montreal.
  • It has a strong base of customers, as shown by its record $123.9 billion mortgage holdings.
  • They work exclusively with mortgage brokers to help meet your mortgage needs.
  • They also introduced My Mortgage, their online mortgage management service, in 2007.
  • First National’s founder Stephen Smith is one of Canada’s richest people and was included into the Canadian Business Hall of Fame in 2019.

First National has been offering new mortgage products since 1988. They have a lot of “firsts” under their belt, including being the first Canadian lender to offer insured interest-only mortgages.

First National is an A lender with a B lender division. This difference means that most of their products are generally geared towards customers with competitive credit scores or more traditional financial backgrounds.

If you are self-employed or have had financial difficulties in the past, you may still be eligible for a mortgage under their B lending side. First National believes everyone should have the opportunity to own a home and will try their best to find a mortgage solution for your situation.

Applying for a mortgage with First National

To apply for a mortgage with First National, you must first find a mortgage broker. First National will refer you to a broker on their site by filling out a contact form, or you can find a mortgage broker yourself.

Not all mortgage brokers work with the same lenders, so confirm that your broker works with First National before moving forward. A mortgage comparison tool will help prepare you for your first meeting with a mortgage representative.

The following is a list of information you typically need handy when applying for a mortgage:

  • Your address
  • Identification
  • Employment details like your current job, income, employment history
  • Financial Details (assets, liabilities)

First National mortgage pre-approval

Many banks provide mortgage pre-approval, which can be a significant advantage when looking to buy a home. Realtors are impressed that you have a set budget, and potential sellers see that pre-approved applicants are serious about buying a house.

However, pre-approval is not as common among independent financial institutions. For First National and other similar lenders, pre-approval is unavailable because of some of their customers’ unique financial positions. If you cannot get pre-approved but still want to understand your budget, a mortgage qualifier calculator lets you understand your borrowing potential.

First National mortgage options 

First National has some solid mortgage products for various budgets and preferences. Like the big banks, they offer fixed and variable rates, flexible payment options, prepayment options, etc. First National’s products are typical of many lenders. 

First National’s mortgage products include:

Fixed rate mortgages

  • These mortgages come in 1-to-10-year terms
  • The closed term means there is no option for lump sum payments
  • Fixed rates mean your mortgage payment will stay the same throughout your term.

Variable rate mortgages

  • These mortgages come in a 5-year term
  • Variable rates mean your mortgage payment could change monthly based on Prime Rate changes.

Open term mortgages

  • These mortgages come in 6-month terms
  • The open term allows you to pay off your mortgage early or make lump sum payments during the term
  • Open terms come with a higher interest rate.

Different mortgages will give you varying options in terms of flexibility. Some of the offerings that First National provides can help you pay off your mortgage earlier than expected. Depending on your type of mortgage, you may be entitled to:

  • Annual 15% lump sum payment
    • Pay up to 15% of your original loan amount per year. 
    • The lump sum must be a minimum payment of $100.
  • Annual 15% payment increase
    • Only available with fixed-rate mortgages.
    • Increase your payment by up to 15%.
    • Can only be used once per year.
  • Double Up Payment
    • Gives you the ability to pay two mortgage installments at once.
    • The second payment goes directly towards your principal balance.
  • Accelerated Payment
    • Allows you to pay 13 months of payments over 12 months.
    • Your regular mortgage payment increases slightly with each installment until you have paid for one extra installment. 

First National mortgage incentives and special offers

First National’s mortgage offerings are pretty straightforward. While some other banks may advertise lower rates for a limited time, cash back deals, or other enticing incentives, First National’s offerings remain more or less the same.

Any First National mortgage comes with the ability to change your payment date and frequency. This option means that if you have a change in your finances, you can change your payment frequency from monthly to:

  • semi-monthly
  • accelerated semi-monthly
  • bi-weekly
  • accelerated bi-weekly
  • weekly
  • accelerated weekly.

First National was also one of the first mortgage lenders to offer an online mortgage management platform. Their My Mortgage program allows you to keep track of mortgage information like payments and personal details.

The service is always available online. Keeping track of your mortgage online is extremely helpful, especially because it saves you time by avoiding phone calls or branch visits.

First National mortgage interest rates

First National mortgages have two branches for their interest rates. They have traditional (A lender) and Excalibur (B lender) mortgage rates. First National’s A lender rates are slightly higher than the Big Six’s posted interest rates.

However, their B lender rates, listed under their Excalibur program, are slightly higher than Canada’s prime rate. Higher interest rates for B lenders exist because of the increased risk B lenders take on when offering mortgages with more lenient criteria for approval. 

A great aspect of First National’s B lender mortgage rates is that the posted rates are very transparent. Some lenders will post A lender interest rates that are misleading for customers applying under the B lender stream.

First National’s mortgage site shows the A and B lender rates separately and includes different tiers under the Excalibur section. The levels show different interest rates based on your financial history and credit rating. Those with a higher credit score are generally offered a more competitive interest rate.

First National Mortgage pros and cons

Pros:

  • Can use a mortgage broker
  • Online mortgage management platform
  • Advertised rate transparency
  • Less strict application requirements

Cons:

  • Higher interest rates than the Big Six
  • Pre-approval not offered
  • Mortgage product offerings are very standard

The takeaway

First National is a versatile mortgage provider with mortgage products for both prime and subprime mortgage customers. If you want a better understanding of possible mortgage rates, First National’s transparency in their posted rates makes it easy to compare mortgage rates between different lenders. Their My Mortgage online management platform also makes it easy to check on your mortgage details and make changes. Speaking with a mortgage broker will give you more information about why subprime mortgages are so popular in Canada, and help you decide if First National is the right lender for you.

Frequently asked questions about First National mortgages

Can I pay my First National mortgage with a Mastercard?

Most mortgage lenders will not allow you to pay your mortgage with a credit card. It poses a risk to the lender and can be detrimental to your finances. If you need to put your mortgage payments on a credit card, some third-party services could help. These third-party services come with a fee and aren’t always accepted by lenders, so do your research before trying to pay for your mortgage installment this way. 

First National does have a Home Equity Secured Mastercard that functions similarly to a Home Equity Line of Credit. This Mastercard allows you to use some of the equity you have built in your home, but it can’t be used for paying mortgage installments.

Can I skip a mortgage payment with First National?

Some B lenders (and A lenders) have flexible payment plans that allow you to skip one mortgage payment a year. Unfortunately, First National does not have a skip a payment option. They do allow you to change your mortgage payment date to help give you a few weeks of wiggle room in the case of an emergency.

Does First National offer an interest-only mortgage?

First National made headlines in 2006 after becoming the first lender in Canada to offer interest-only mortgage payments. The interest-only mortgage hype has died down since then, and First National no longer advertises this product on their site. Interest-only mortgages seem to be available for commercial owners, but to learn more about residential options, you will need to speak with a mortgage broker. 

Does First National provide good rates on mortgages?

Like many B Lenders, First National’s mortgage rates are higher than the Big Six banks. Most B lenders don’t advertise the rates for their subprime mortgage customers, but one bonus with First National is that they are transparent with their rates. First National’s subprime mortgage offerings are called “Excalibur mortgages,” and their posted rates can be easily found on their site. There are different tiers under each annual term, outlining the rates you may qualify for based on your credit score, etc. Some of these rates can be up to 2% higher than the national prime rate. First National’s standard rates from their A lender division are a bit more competitive. As always, the higher your credit score, the lower your interest rate should be.

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