Maybe it’s a throw-back to school days, but when we hear the terms A lender and B lender, most people automatically think an A Lender must be better than a B Lender. If there was such a thing as an A++ lender, that’s probably the one we’d be drawn to.
Actually the terms “A Lender” and “B Lender” have more to do with the borrower than the quality of the lender — but, strictly speaking, it still isn’t a rating — a good vs bad sort of judgment. Rather, it simply has to do with what will best fit the needs of the borrower and their unique financial profile or circumstances.
A lenders such as banks and credit unions will only give mortgages to people with a steady, good income and excellent credit. B lenders, including trust companies and mortgage finance companies, will consider more aspects of a borrower’s financial status when determining if they will offer a mortgage, such as their assets. As a result, a B lender mortgage might be a better fit for those who are self-employed or who have a less-than-stellar credit score.
You might have also heard of private lenders. So, what is a private lender? This is a lender who is outside the traditional lending institutions. Private lenders include: mortgage investment corporations, investor groups or individuals. Private lenders are often lumped into the B lender category, but they cater to a specific sub-group of the typical B lender borrowers. Mortgages provided by a private lender are short-term, and, despite the higher fees, might be useful if you need money quickly, for home repairs, to stop a foreclosure or are buying a non-conventional property such as a mobile home, for example.
A lenders in Canada are chartered banks that are federally regulated, and credit unions that are generally provincially regulated. Most mortgages in Canada are obtained through Canada’s big banks, RBC, TD, Scotiabank, BMO, CIBC, and National Bank, with RBC being the largest mortgage lender in the country.
B lenders provide an option to those who don’t meet the very strict qualifying criteria of A lenders. Because these lenders aren’t so rigorously regulated, they are free to customize their loans to the borrower’s financial situation. This translates to a greater number of appropriate options for the borrower.
A private lender mortgage could be a good solution for specific situations. Usually, people who apply for these types of mortgages don’t qualify for the more traditional ones.
If you live in Victoria, BC, Vancouver Island, or anywhere in British Columbia, the best way to find a mortgage option that is specifically tailored to your situation, is talk with us. Auxilium Mortgage’s experts deal with over 50 Canadian and BC lenders, from big banks to smaller credit unions and trust companies. Once we know your situation, we can do the shopping for you, saving you the hassle. We know mortgages inside out — what to look for and what pitfalls to avoid.
Give us a call and we’ll talk.