Alternative Lending

Alternative lending has become a more frequently used option for clients who don't qualify for a mortgage under traditional 'A' lenders.

Alternative lending can add flexibility to a mortgage agreement, and open up doors for deserving borrowers.

Why is alternative lending also referred to as "B" lending?

Depending on your home equity, financial situation, and credit report, securing a mortgage has potential to be a tricky process. Traditional 'A' lenders have very strict protocols and regulations to adhere to, which unfortunately sometimes negatively affects deserving borrowers.

If your mortgage application is denied through traditional avenues, alternative lending may be a suitable option!

Alternative B-lenders often help borrowers get their foot in the door of the real estate market when the big banks have said 'no'.

Why Choose A B-Lender

Life happens and as much as we would all like our borrowing profile to be attractive to lenders, there are occassionally circumstances which bounce us into less than ideal financial situations.

Have you had to declare bankruptcy? Are you self-employed? Do you have bruised credit?

These are all reasons why your mortgage application with big banks may face challenges.

Federally regulated banks will often deny mortgages to borrowers in these categories who they classify as high-risk, where as a B-Lender may assess your unique situation with the help of a mortgage broker to provide you with a mortgage solution which may not otherwise exist.

Not bad, eh?

Are B-Lenders An Ethical Solution?

Altnernative B-Lenders operate within the mortgage regulations as outlined by the Canadian Mortgage and Housing Corporation (CMHC), an official Government agency.

Traditional banks are beholden to what are often considered very rigid rules - they often don’t have the ability to fully assess applications on a case-by-case basis (which is a freedom that alternative B-lenders thoroughly enjoy)!

B-Lenders operate with slightly more flexibly and can support you with additional mortgage options.

Alernative B-lenders take a deeper look into a potential borrowers situation to determine their level of risk. There is more room for certain exceptions to be made through an alternative B-lender!

As an alternative, B-Lenders often assist borrowers who wouldn't qualify with an A-lender; this doesn't mean they just approve any application!

Most of the same mortgage documentation which is required by A-lenders will be required by alternative B-Lenders.

With the help of an experienced mortgage broker, creative and ethical mortgage solutions are just around the corner for alternative B-lending!

Do B-Lenders Give More Desirable Rates?

Depending on your unique circumstance, there may be better fixed rates or amortization periods offered through a B-Lender than through traditional banks. In fact, a minor increase of low-risk individuals who prefer B-Lender mortgages has recently been noticed within the industry.

More often that not, the mortgage rates from alternative B-Lenders tend to be higher than the major banks.

Why?

Because in order to provide a mortgage solution, alternative B-lenders have increased their risk of lending by securing mortgages to higher-risk borrowers who don't qualify on the A-side.

This is why it’s important to discuss your options with a mortgage broker who can help you achieve the best rates by using their knowledge to negotiate fantastic deals between A-Lending, B-Lending, (and sometimes even private lending).

What Happens If I’ve Been Denied A Mortgage By A B-Lender?

There are additional mortgage avenues which exist if you haven’t qualified for a mortgage with an alternative B-Lender:

Apply to a private lender who would assess less of your financial history and place more focus on how much current home equity you have to offer.

Use a co-signer for your mortgage (keep in mind that this is risky for whoever signs. It means that if you default, they may be liable!)

If are a high-risk borrower (due to your credit score etc.), seek advice from a licensed mortgage broker who can help increase your chances of being approved

For a no-risk chat regarding your mortgage opens, give me a call!

***other conditions may apply to anything listed above. The information provided on this page should NOT be implicitly relied upon, and may not be 100% up to date. It's best to contact us for the most current conditions/program offerings for first time buyers***