Short answer
Alternative (B) lenders finance residential borrowers that banks decline — bruised credit, non-traditional income, or recent self-employment — typically at higher rates and with a 1% lender fee. Most alternative mortgages are one- or two-year terms designed as a bridge back to prime lending. Expect at least 20% down or equity on most files.
Jump to Section
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 for Your Home
Life happens and as much as we would all like our borrowing profile to be attractive to lenders, there are occasionally 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 residential mortgage application with big banks may face challenges.
Federally regulated banks will often deny mortgages to borrowers in these categories, whereas a B-Lender may assess your unique situation to provide you with a mortgage solution which may not otherwise exist.
Real-World Scenario
How Alternative Lending Opened a Door
The following is a fictional scenario that illustrates how this service can make a real difference.
Carlos, 34 — Newcomer to Canada, Living in Toronto, ON
The Situation
Carlos moved to Canada from Colombia two years ago on a permanent residency visa. He secured a well-paying job as a civil engineer earning $95,000 per year and had saved a 10% down payment. He found a condo in the GTA for $580,000 and was excited to stop renting and start building equity.
The Challenge
Despite his strong income and savings, Carlos was declined by three major banks. The reasons: he had no Canadian credit history (his credit score was only 640 from a secured credit card opened 18 months ago), he had less than two years of Canadian employment history, and he didn't have the traditional documentation the banks required. He was told to 'come back in a year.'
The Solution
I connected Carlos with a B-lender that specializes in newcomer mortgage programs. This lender accepted his employment letter and pay stubs as income verification, considered his international work experience, and was comfortable with his growing but limited Canadian credit history. With mortgage default insurance and his 10% down payment, we secured an approval at a competitive B-lender rate.
The Outcome
Carlos purchased his condo and is now building both equity and Canadian credit history. His plan is to refinance with an A-lender at renewal in two years, by which time he'll have a strong credit score and established employment history. The B-lender solution gave him a path into the market two years earlier than the banks suggested.
*This is a fictional scenario for illustrative purposes only and does not represent a real client or actual mortgage application. Individual results and qualification criteria may vary.
Frequently Asked Questions
Are B-Lender rates higher?
Yes, alternative lending rates are typically higher than traditional rates to account for the additional risk. However, they provide access to financing when other options aren't available.
Can I move to an A-Lender later?
Absolutely! Many borrowers use alternative lending as a stepping stone. Once your financial situation improves, you can refinance or renew with a traditional lender.
Have questions about residential alternative lending?
Call for a free, no-obligation consultation.
(604) 780-5173
