Alt-A or B lender mortgages are alternative mortgage solutions available to home buyers in Canada. These types of mortgages are designed to assist individuals, who do not fit traditional mortgage guidelines and have been turned away by the big banks or other mainstream lenders.
As rules and regulations for mortgage lenders have become tougher over the years, it has become increasingly difficult to secure a mortgage through conventional lenders. Every year, more homebuyers are turning to alternative lenders for their mortgage.
Often these prospective homebuyers will have bruised credit ratings, which may be caused by tough life circumstances like unpaid credit card bills, divorce, a consumer proposal, or even personal bankruptcy.
At Main Street Mortgage, our goal is to make it simple for people in any situation to access a mortgage. We understand that your credit score doesn’t always fairly reflect your circumstances, and we’re here to help.
Watch the video below to understand how Alt-A and B lenders work:
Why Choose an Alt-A or B Lender?
There are a wide variety of reasons to choose to finance your mortgage through an Alt-A or B lender. Alternative lenders are there to help everyday people in tough situations. They provide a secondary solution to let you purchase or refinance a home if you cannot secure a mortgage through traditional methods.
Typically, the reason that people will select an alternative mortgage is related to their current circumstances. Often these circumstances are just part of life — you just went through a divorce, you’re recovering from a failed business or personal bankruptcy, you and your family are new arrivals to Canada, or you are self-employed and cannot verify your earned income.
Whatever your circumstance, the team at Main Street Mortgage has experience working in these types of situations. We understand the programs and financing options available to help address these challenges, and we can help you get you acquire a mortgage.
Click the links below to learn more about each situation:
How Does Alternative Lending Work?
Alternative lenders are designed to work in the short term, until you can get back into a position where you’re able to borrow from mainstream A lenders again. Alt-A or B lenders may have higher rates, but their goal is to get you back to lower rates in the future.
When you partner with the team at Main Street, we will help you create a customized plan to transition from Alt-A or B lenders to A lenders in an effective, sustainable way.
Types of Mortgage Lenders in Canada
In Canada, there are three basic types of mortgage lenders:
- A Lenders
- Alt-A or B Lenders
- Private Lenders
What are A Lenders?
In Canada, A lenders are the five big banks (RBC, TD Canada Trust, Scotiabank, BMO, and CIBC) and other mainstream mortgage lenders, like credit unions or monoline lenders.
These lenders will typically have the best mortgage rates on the market, but they will also require higher credit ratings to qualify for their products. They will typically offer mortgage insurance through CMHC, Genworth, or Canada Guaranty for home buyers who cannot make a 20% down payment.
What are Alt-A or B Lenders?
Alt-A lenders or B lenders are lenders that are not banks or credit unions, but are reputable in the lending field. They typically fall into two main groups:
- Monoline Lenders who provide a specific, secondary product to home buyers with bruised credit, who cannot qualify for their primary offering.
- Alternative Lending Organizations that are specifically designed to assist people who do not fit the guidelines of mainstream lenders.
The mortgage rates from Alt-A lenders are typically quite competitive, often only 1 – 2% higher than A lenders, and they will be more lenient in the credit rating that they require to qualify for a mortgage. There may be a lender fee associated with an alternative mortgage, depending on the lender.
What are Private Lenders?
Private lenders are unregulated mortgage lenders, who tend to be a last-resort option for home buyers in Canada. They will typically offer mortgages based on the equity available in your existing home, rather than looking at your credit rating or income
While these private lenders require very little in the way of qualification, their mortgage rates tend to be higher than the rates of Alt-A or B lenders. If you choose to work with a private lender, we recommend getting the support of a professional, who can assess the offer on your behalf and provide trusted advice.
How We Can Help
If you’re struggling to get approved for a mortgage at one of the big banks, or other mainstream lenders, it may be time for you to consider Alt-A or B lenders as a short-term solution.
The experienced team of mortgage specialists at Main Street can assist you in navigating the complex world of alternative lending and draw on a network of over 230+ Alt-A and B lenders to find a mortgage that fits your specific situation. We can also help you develop a plan to get back to A lenders and lower mortgage rates in the long-term.