The advantages of B lender mortgages can vary with the creditor you choose, but some of the most common include:
Alternative solution: Sometimes, qualifying for mortgages from traditional lenders is hindered by existing mortgage arrears, type of income, filed bankruptcies in the past or consumer proposals, poor credit scores, unconventional down payment sources, and high debt servicing ratios. A B lender Toronto will provide the alternative solution needed under such circumstances.
Shorter terms: Instead of the typical 5-year mortgage term, a B lender offers between one to three years. As such, the borrower gets to transition to traditional lenders without heavy penalization.
Leniency: B lenders do not have very stringent rules. Their debt servicing ratios are considered to be more affordable. They allow non-conventional sources of income, such as bonuses or commissions and can accept down payments from diverse sources. The B lender mortgage rate may be slightly higher than what traditional lenders offer, but the leniency makes up for that.
The main disadvantage that borrowers experience when dealing with B lenders is higher closing costs and interest rates.
Getting a mortgage from a B lender also comes with the responsibility of doing an appraisal on the property regardless of the refinance or purchase. That usually applies to every type of mortgage and may seem like exploitation, but it is just an extra closing cost you have to pay when the A lenders turn down your mortgage application.
To get the B lender mortgages, you must have at least 20% of the down payment. This requirement is not a problem if you are refinancing. Still, if you are purchasing a new property, your budget will be greatly affected, especially if you only planned with the minimal amount of 5% or 10%.
Getting information concerning B lenders is not as easy as it is with traditional ones because their products are not usually advertised.
You may be wondering, how do I get a mortgage from a B lender? Credit scores play a major role in mortgage acquisition because they reflect your ability to handle credit well. Several factors, such as the duration you have had the credit, your ability to keep up with payments and the payments you have missed, any debts referred to a collection agency, defaulted loans, and the existing balance, is used to determine the credit score. Lenders, both traditional and private, will rely on that score to decide whether to give you the mortgage or not. Low scores can prevent you from getting a loan from A lenders, but you can still qualify for a B lender mortgage at a higher interest rate. In most cases, the traditional financial institutions will require a minimum score of 680, but B lenders Ontario will consider the value of your collateral.
Unlike conventional loans, B lender mortgages do not have very strict rules for self-employed individuals. Traditional lenders tend to ask for the tax returns for the previous two years and financial statements dating back the same period to prove that you are earning as much as you say. That may be a problem if you have been employed for less than two years or have alternative sources of income supplementing your main one.
With a B lender Toronto mortgage, you can qualify even without a two-year employment history. Borrowers relying on commission-based salaries can also get mortgages from these lenders, irrespective of the inconsistent income ranges.
...pick the one thats right for you.
|HELOC||4.2% (prime + 0.25%)|
First National Financial
Street Capital Bank
|5 year variable||1.15% (prime - 1.3%)|
|3 year variable||0.99% (prime - 1.46%)|
|Line of Credit||Starting at 3.00%|
|Equity Loans||Starting at 5.99%|
|Private Mortgages||Starting at 4.99%|
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