The Canadian Mortgage and Housing Corporation (CMHC) prepares annual research on the number of work hours in one month, at an average salary, required to bring mortgage payments down to 30% of income. Based on a 37.5 hour workweek, there are 162.50 available work hours in a typical month, yet in cities of all sizes, the hours required to reach the magical 30% figure exceed those available, sometimes by a huge margin:

• Vancouver – 469

• Calgary – 301

• Toronto – 299

• Hamilton – 213

• Saskatoon – 206

• Halifax – 195

• Montreal - 193

• Ottawa - 187

What does this tell us? Many Canadians are faced with housing costs well in excess of the recommended 30% cost-to-income ratio. Money that is spent on housing cannot be spent on other essentials. For low and middle-income earners, this situation can lead to the accumulation of debt as families try to make ends meet while balancing huge housing costs.

In the worst-case scenario, debt problems can spiral out of control, leaving many people overburdened and facing serious financial troubles.

When trying to get their finances in order, many people seek to use the equity in their homes as collateral for debt consolidation. The problem is, those deemed a credit risk or, in severe cases, having experienced bankruptcy, are often shut out by traditional lenders.

Mortgage bad credit loans have become increasingly necessary in today's economic climate. Housing prices are off the charts, and the costs for everything from food to gas have increased substantially. It is very easy for people to become overwhelmed while just trying to stay afloat financially.

People seeking mortgage bad credit loans are often in dire straits. They have usually exhausted all possibilities of borrowing from traditional lenders and need another way to help them with either a 2nd mortgage refinance or a home equity loan.

Enter private lenders. There are many individuals and companies in Canada that are willing to take on the role of mortgage lender. Private mortgages, whether for a primary or secondary mortgage or refinancing, are an option for people with very large debts.

Private mortgages involve risk, so they come at a cost. A private lender will typically charge between 10% and 13% interest. This level makes the mortgage game attractive to investors, while still making it possible for those with bad credit to obtain a second mortgage.

A private mortgage is not necessarily a long-term fix. Because of the higher rates, most borrowers use private mortgages to re-establish their credit rating. After a solid period of repaying on time, most borrowers can then approach a traditional lender again with an improved credit rating and a better chance of success.

Connections to private lenders for mortgage bad credit loans are typically made through mortgage brokers. As with any higher-risk financial decision, be sure to check the lender's record carefully before securing a loan to ensure that they are ethical and reliable.