Toronto: When we go in for a mortgage, you would have heard people ask if your mortgage is with lender A or B? Well, to answer these questions you definitely have to know in detail about these lenders.
Big banks usually call themselves as A lenders and all the others are referred to as B lenders. Though these big banks make them sound superior, it has nothing to do with the lender. It has everything to do with the client’s profile.
A lender usually offers loans only to client’s with good credit score and eligibility cut off of income. While, B lenders cater to client’s who do not qualify to get a mortgage signed from A lender. When a client’s credit score or income does not meet the qualifying guidelines of A lender, they happen to become ideal clients for B lender.
A few well-known A Lenders:
- Alterna Savings
- First National
- Merix / Lendwise
- Meridian Credit Union
Plus any of the major banks…. RBC, CIBC, BMO, National Bank, Scotia and TD
- Home Trust
- Equitable Bank
- Community Trust
- Haventree Bank
- ICICI Bank
How B lender offers mortgage for u qualifying clients?
Credit score & Equity:
A lenders scrutinize the client by the qualifying credit score & income while B lenders target on their share or equity in the home. B lenders ask for a down payment of 20, 25, 30 or 35 percent or they demand equity in the property to be bought.
Location of property:
B lender considers the location of property and its worth. If the property is a prime location and more saleable, then they accept to take that client. A home in Toronto will be more acceptable for a client to quality than a pick in Vaughn or Barrie. The location in a metropolitan area is a real qualifier.
Different Mortgage rates of A & B Lenders:
Since, the B lender takes more risk their interest rates are higher than A by nearly 1.25-2%. There might also be an additional fee of 1% collected by B as a lenders fee. It is always wise to keep the mortgage going with B lender for a short while, then after your financial situation gets better move to A lender which offers reduced interest rate. The short duration can be a few years, i.e 1 to 2 years.
Can A lender & B lender fund my mortgage at the same time?
Yes, in many cases part of the mortgage is carried out in divisions. Where A lender will fund a percentage of the loan and B lender will do a part of it at the same time. The mortgage will usually be dependent on one lender more than the other.
Some banks act both as A and B lenders, however their interest rates will differ. The A side might depend on insured mortgages with less than 20% down payment but keen on default insurance that a client holds. Monoline lenders mostly fall under A category, but also have strong Blenders
When a client doesn’t qualify for both A and B lenders, we have the third type of lender called the private lender. These lenders are expensive as their interest rates are higher goes up to 7-8%. They also charge a fee of 1 or more percentage and brokerage fee as well. Sometimes client’s who go for private or B lenders land up in a rough patch even they are genuine, some even hit a temporary bail situation. So careful planning a a a a a and patient approach can make a peaceful buying pattern that can make you enjoy your property.