22 Jul Are The ‘Big 5’ The Only Option For Canadian Mortgage Buyers?
If you’re looking to buy a new home, no longer are you restricted to the Big 5 as your only options for applying for a mortgage. Nowadays, alternative mortgage lenders – often referred to as ‘B’ lenders’ – are growing in popularity and the choices are wider than ever before.
In the past, most homeowners had a good credit rating and a dependable source of income, but as times have changed, this is no longer the norm. These days, if your credit rating isn’t great and you struggle to prove your income, statistically you qualify as the new normal. This all means that gaining approval from one of the Big 5, Canada’s biggest banks, may well be beyond your means. However, help is out there if you fall into either of these categories in the form of alternative lenders, who use a different approach when approving mortgages; less interested in bad credit history or unreliable income, they generally assess your equity instead.
Do B lenders offer the same mortgages as the Big 5?
Most of the products on offer to homebuyers from Canada’s biggest banks, are also offered by alternative lenders, including 1st mortgages, home equity loans, home equity lines of credit (HELOC), 2nd mortgages and mortgage refinance and debt consolidation. Many B lenders also offer a range of products that are more flexible than those offered by the Big 5, and they will consider poor or bad credit mortgages, interest only mortgages, 100%rental offset mortgages, stated income mortgages, property tax loan mortgages and CRA debt consolidation mortgages.
What are the biggest differences between the Big 5 lenders and B lenders?
While Canada’s big banks are looking for faultless credit and a stable income that can easily be verified, B lenders have shifted their focus to how much equity you have and underwrite their approvals using an approach that is based more upon common sense. You might be wondering how B lenders can take this approach, and it’s down to the fact that they’re not governed in the same way that the big banks are, which enables them to make more exceptions when approving mortgages.
How have the new mortgage rules impacted upon the Big 5 lenders?
New rules set out by the federal government have forced the bigger mortgage lenders to reduce amortizations and mortgage loan sizes. If you’re a self-employed person seeking a mortgage, these new rules will make it harder for you to borrow and will limit the percentage that clients
can refinance their home to.
What do the new rules mean for B lenders?
Essentially, this has simply meant that alternative lenders have become an even more attractive prospect to buyers, and mortgage brokers are increasingly turning to them to get the best rates for their clients.
There are many alternative or B lenders working for homebuyers today, and the best way of gaining access to them is through a mortgage broker. With so many mortgage options available through lenders that don’t have to follow the same restrictions as the Big 5, navigating your way through them all can be tough and often confusing. Going it alone will usually take you longer and may not always find you the best deal. Hire a mortgage broker and purchase your new home with confidence.