When it comes to lending and mortgages, it’s important to know the basics — the ABCs, if you will. So, let’s start with A Lenders! More than 70% of Canadian mortgages are done through banks, so it’s most likely to be your first touch point.
A Lenders usually come in the form of banks and other financial services companies that cater to people who meet their credit and income qualifications. Since A Lenders are the most common lending pool, this is what most people assume when thinking about mortgages. They typically offer the best rate with no lending fees.
Myth: Mortgage finance companies (MFCs) only do B or alternative lending.
Fact: Mortgage finance companies typically do one thing — lend mortgages! You can’t get a chequing account, credit card, or do investments… they are mortgage specialists. That said, the vast majority do A-type lending. Just because you’re not with a big bank, doesn’t mean you’re with a B lender.
A Lenders also require insurance in specific situations, like when the buyer has less than a 20% down payment, is new to Canada, and in business for self cases. These are cases where the client pays a default insurance premium to help guarantee the bank’s money in case you default. That said, it also means you don’t have to put 20% down!
Pro-Tip: Mortgage (default) insurance can be purchased through the Canadian Mortgage and Housing Corporation (CMHC), a Crown Corporation, or via a private company like Sagen or Canada Guaranty.
Recently, there have been some similar patterns presenting themselves. Maybe this sounds familiar: “I’ve been with this bank forever and they’re telling me I can’t get approved for a new mortgage because my new job is too recent… can you believe this?” In cases like these, assuming the new job is in the same industry or is a similar (or more senior) role to what you’ve been doing, we can likely set you up with a mortgage finance company.
Just because they aren’t one of the Big Six Banks, doesn’t mean they’re a B lender. The main difference is that they have nothing else to sell you. They don’t care where you bank or what credit cards you have, they just want your mortgage. In some cases, they even have better interest rates, more lenient penalties, and higher pre-payment privileges than some banks!
There are lots of lending options out there. Contact the Kyle Miller Mortgage Agent team so we can discuss your situation and provide the best solution for you!
Recent Comments