Canadian Mortgage Lenders
Mortgage Lenders in Canada
Canadian mortgage lenders provide a wide range of products. These financing options range from short-term bridge options to 25-year residential mortgages. Whatever your mortgage options may be, a Canadian mortgage broker is there. That broker will work with Canadian mortgage lenders to find the product ideal for your needs.
Canadian mortgage lenders have different requirements for borrowers. Generally speaking, Canadian mortgage lenders are looking for three things from a borrower. The first is your credit score. Your credit score is what indicates to a lender your level of trustworthiness when paying bills. The better credit score that you have, the better interest rates that you will get.
The second factor is down payment. This impacts how much money the lender will have to finance. The more money you are able to put down, the less principle there is on the loan. This can also have an impact on your interest rates and influence the total amount you pay for a home.
Lastly, lenders look at your financial ability to make future payments. They want to be certain that their investment will be repaid. This requires detailed financial statements in order to verify that your income is as you say it is.
Private Canadian Mortgage Lenders
While financing through a bank is an option, there are also private mortgage lenders to consider. When it comes to credit score, private lenders tend to be more lenient. Private lenders tend to look for commercial or residential projects that offer two things.
The first is a profitable outlook. They want to be certain that these ventures will be successful enough to stay around and continue to make payments. The second thing that they look for is a well-made business plan. Lenders want to know what the plan of the business is and how they project earning revenue.
A private mortgage lender could be the best option for the following factors:
- Financing is needed within a shorter timeframe than a bank or conventional loan can be secured
- Financing is needed to hold a property while a loan is being secured
- Credit score is under that required by a conventional mortgage lender
- The project that requires financing is riskier than a conventional mortgage lender is comfortable with lending toward, but poses promising returns
High Ratio and Conventional Mortgages
The risk of the lender is the prime factor when determining the amount they will offer a potential home buyer. This is where down payment comes into play. The less money that the borrower provides up front, the greater the financing that the lender provides. This also means the lender is assuming a greater risk.
If the borrower is paying 20 percent or less of a property value, the lender is providing what is known to be high-ratio. This is because the loan to value (LTV) ratio is decreased based on the percentage of the property value that the lender is providing. The less money being put down, the greater the LTV is.
For properties where the borrower is providing 20 percent or more of the property value, this is known as a conventional loan. Conventional mortgages are usually granted by lenders at a lower rate than a high-ratio mortgage. This is because the borrower has shown the lender that they are capable of supplying a larger down payment toward the property purchase.
Canadian mortgage lenders are required to only provide high-ratio insured mortgages based on specific things. This means that, in order to qualify for a high-ratio insure mortgage, the borrower has to meet either the chartered-bank-five-year posted rate or the contract rate, whichever is greater.
There are some mortgage lenders that apply these same standards to conventional mortgages. Check with the lender to find out their specific terms when you begin your mortgage discussions.
Canadian Mortgage Brokers Have Greater Access to Lenders
Using a mortgage broker is highly recommended for home buyers. This is because they have access to a large network of Canadian lenders. Going through a lender on your own means only being presented the products from that lender.
This is where having a mortgage broker is so beneficial. Mortgage brokers are able to compare your needs for a mortgage through various outlets. And that is how borrowers get the very best interest rates available.
Mortgage brokers also have access to both smaller mortgage lenders, large-scale lenders, and even private lenders. Having more options provides the borrower with choices and choices lead to better interest rates.
It is important to know what limitations and restrictions that each mortgage lender has. By knowing what those restrictions are, it allows the borrower to make a more educated decision about the type of mortgage that they can afford.
And because there are so many different options, it is important that the borrower find the plan they need. Being able to pay off a mortgage faster is what leads to fewer interest payments and, ultimately, less money spent.
Flexibility is also key. Plans can change all the time. Even if you didn’t think you would be moving out of your home, having the ability to sell your home or move is an option that some need. Check with the lender to find out what those options are beforehand.
Easy Online Access
Best of all, most Canadian mortgage lenders are accessible online. Take the time to look over the websites of multiple mortgage lenders. Give yourself an idea of the products that they have available and the differences between each. You can find a list of the approved mortgage lenders in Canada here.
While it may seem time-consuming and stressful, this part of the process is necessary. Even a few interest points can result in thousands of dollars saved or lost. Having a mortgage broker to do the groundwork for you can make all the difference in the world.
A mortgage broker will look at the products available and can often lead you directly to the best products for you. Best of all, they are paid by the lenders. This means that you can find the best possible rate without having to worry about exorbitant broker fees involved.