Working For You, NOT The Banks!
Explaining The Three Main Mortgage Markets Available
June 25, 2020 | Posted by: Jeffrey Kioussis
Mortgage Markets Available
You’ve learned how lenders look at an application in our previous blog Self Emloyed Mortgages, Getting Started and What To Expect When Applying. Now it’s time to determine what type of lender is right for you.
With a variety of different lenders out there catering to all types of mortgages it might be hard to distinguish which lender is the right one for you. Don’t worry, the answers are always found in your application.
In Canada, there are three primary mortgage markets that are utilized. Each market caters to a specific niche and offer different products catering to that niche. They all operate differently and have different qualification factors. Here is an overview of the three markets we have here in Canada.
Banks/Trust Companies/Credit Unions/Monoline Lenders
This is our first tier of lenders also known as “A Lenders”. They generally offer the best rates and products. This is the reason why most people aim to have their mortgage with an A Lender. They cater to customers with good credit scores and reliable income. They are subject to federal regulations and have strictest requirements.
With a multitude of banks in Canada there are several such as Equitable Bank & Home Trust that offer niche mortgages for clientele who have special requirements or situations. They are also known as “B Lenders”. They rely heavily on understanding situations so that they are able to fill the need. They offer lower barriers of qualification for their products but also offset the risk with a slightly higher interest rate. They cater to individuals, such as yourself, who might have difficulty showing guaranteed income or have higher than normal lending ratios.
Private Lending / Private Lenders / Equity Lending
Private lending / mortgages are loans where individuals or businesses provide funding directly to the borrower. This is a direct mortgage market which puts the mortgagee & mortgagor directly in contact through their brokers and is offered by mortgage professionals who are able to navigate through the process. The barriers of entry are the lowest in this market however interest rates are highest to make up for the risk. Generally, they are interest only loans with short terms of up to 2 years.
Now that you are familiar with our mortgage markets here in Ontario and want to know where your mortgage will go click here to see how a lender looks at an application. Another option is to simply fill out this application and let a mortgage professional assist you.