The big banks turn your mortgage application down and a private mortgage lender offers you a crazy interest rate? First of all — make sure that you’re aware of ALL the options you have, to check if you can visit this website. 

You’ll most likely learn that it’s time to aim for the golden middle: get a B-lender mortgage from a reputable mortgage finance company. Here’s how to get approval and why it can be more beneficial than going to an A-class lender.

What is a B-Lender Mortgage?

In short, it’s a mortgage with a slightly higher interest rate than you’d get from a big bank and it’s a more beneficial way to get the loan than going for a private mortgage.

What’s the difference between B and A Lender Mortgage?

B is the second-class lender in Canada. They’re authorized to lend money like any other bank-like mortgage company, but unlike their rivals, they don’t get the government protection from taxes and fees. They are still subject to banking regulations, so you can rely on their soundness.

There’s no big difference in interest rate between B-lenders and A ones. Especially if you consider the insurance and all the extras every bank will try to put in your contract.

Why choose a B-Lender Mortgage?

There are many reasons to take advantage of the B mortgage.

• The interest rate is higher than A lenders offer, but it’s still affordable. You can expect it to be higher on average between 5 and 10% more than the average interest rates. In some cases, you’ll pay significantly less, thanks to a whole spectrum of special offers.
• The monthly payment is lower. You get a better interest rate, but you also make much less money in total each month.
• The payment term is shorter. Private lenders usually demand a longer payment term, as well as the A-class lenders.
• The mortgage contract has fewer restrictions. It’s more flexible than the one from the big banks. It’s especially important if you have unconventional plans for your mortgaged property (say, to rent it out or use for business purposes).
• You are eligible for even lower interest rates if you qualify for a special offer. Once you’re approved, you can get cheaper rates than what you see on the market in some cases. it’s rare, you’ll have to prove that you truly qualify, but it’s definitely worth it in the long run.

In addition, the mortgage application process with a b mortgage lender is faster. Applications are processed on average within two weeks.

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What Insurance Services Can Be Included?

It depends on your region and the exact situation, but you can expect one of these options to be in your contract (with no right to remove it):

•     Insurance of your mortgage in case you die (mortgage life insurance);
•     Insurance that protects your investment if the borrower dies before the term of their loan is over (term life insurance);
•     Insurance that protects your investment from damage caused by natural disasters, fire, etc (mortgage protection insurance).

If you choose to go for a mortgage loan with a private company, you can expect to get an addition of several percent to the interest rate stated in your contract in insurance. 

That’s not true for a B-class lender loan: with some work on your credit history and larger down payment, you get it on almost as beneficial terms as it would be in the best case scenario with one of the big A-class banks.

The Decision

After reviewing the points above, it is logical that a B-lender mortgage is more recommended than private lenders. If you choose a mortgage company, make sure you carefully read the terms of the contract. 

Don’t be afraid to ask if there are special offers that you can use without paying too much for them. A few other factors that can affect the interest rate include your income and how much you have to pay in taxes and fees. If you consider all the details, a B-lender mortgage can definitely be the better choice. 

If you choose to go for a mortgage loan with a private company, you can expect to get an addition of several percent to the interest rate stated in your contract in your respective insurance.

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