Wondering what are the types of mortgage lenders, and what your options are? I’ll break it down for you!
Let’s talk about the types of lenders mortgage brokers have access to!
The first one is the big banks. These are the Scotia Banks, TD Banks of the world,—you know them very well. They spend lots of time advertising to the public.
There’s a second group of lenders called “mortgage finance companies.” Now these lenders are in competition with the chartered banks for the same types of clients. We’re talking about lenders for people who have good credit, proven income, a good down payment, etc.
There’s a third group of lenders called “alternative lenders.” These are institutional lenders where they’re focused on self-employed people who may not show as much income to the CRA. The chartered banks or the mortgage finance companies will have certain income requirements. But these alternative lenders will look at income differently. They might work with people who have had credit bumps in the past. They have a slightly higher interest rate, and they’ll charge a fee. But they definitely serve a purpose for a lot of business owners or people who have had issues in the past.
The final group of lenders is called private lenders. These are institutional lenders or private individuals that are not so focused on a person’s income, and they definitely have no issues with bad credit. They’re much more focused on the quality of the property and how much they’re lending versus the value of the property. Now, this means much higher interest rates, and they’ll charge lender fees. Another thing to know is that, as mortgage brokers, they don’t pay us. So we have to charge a broker fee for our time. These are definitely lenders where they’re in for a short period of time to solve problems. And then ideally, you refinance out, or let’s say you’re flipping a house, you sell the property, pay off the mortgage, and on you go.
There you have it—four different types of mortgage lenders! There are many options out there for you. If you want to know who the right lender is for your circumstances, give me a call! You can reach me by phone or email.
I also have a helpful video about why now is a good time to get a variable-rate mortgage.
About Jason Scott, Edmonton Mortgage Broker
Looking for a personalized mortgage solution? As an Edmonton Mortgage Associate, I’ll be your trusted partner who will help you get the right mortgage for your family home or Investment property. I’m Jason Scott, and I’ll be your Mortgage Broker Edmonton.