Alternative (B-Lending) Mortgages
Alternative or B-lending mortgages are a financing option for borrowers who may not qualify for traditional (A-lending) mortgages due to credit issues, non-traditional income sources, or other factors. These mortgages offer flexibility in qualifying criteria but come with higher rates and fees compared to A-lending.
Key Points:
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Minimum Down Payment: B-lending mortgages typically require a minimum of 20% down payment for single detached homes. For condos or townhouses, the down payment requirement may be higher and is assessed on a case-by-case basis, sometimes reaching as much as 35%.
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Higher Rates and Fees: B-lenders charge higher interest rates and fees compared to traditional A-lenders. Rates are usually around 1% higher than prime A-lenders, and both the lender and the broker may charge a fee of around 1% each for facilitating the mortgage.
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Flexibility in Qualifying: B-lenders offer more flexibility in qualifying criteria. They may consider non-traditional types of income, such as income from a family member who will not be on the mortgage but contributes to household expenses.
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Case-by-Case Basis: B-lending criteria vary widely and are assessed on a case-by-case basis. It's important to have an in-depth discussion with a mortgage broker to understand the specific requirements and options available.
Why Consider B-Lending?:
B-lending can be a viable option for borrowers who do not qualify for traditional mortgages but are able to provide a larger down payment. B-lenders consider a wider range of income sources and are more flexible in their qualifying criteria, making it possible for borrowers with unique financial situations to secure financing.
Document Requirements:
Document requirements for B-lending mortgages can vary significantly depending on the borrower's financial situation. It's recommended to consult with a mortgage broker to determine the specific documents needed for your application.