B Lending (Subprime Lending)

Mortgages are typically classified based on the payment risk that the lender faces.

Prime mortgages (also known as “A” deals) entail lower chances of the borrower defaulting than non-prime mortgages (aka., subprime or “B” deals).

“B” mortgages are riskier so lenders rely heavily on the equity in the subject property and/or on charging rate premiums to mitigate that risk.

 

Source: CanadianMortgageTrends.com