B Lender Mortgages Misconceptions and Benefits #Canada

hi everyone this is Mia at Effortless Mortgage how  are you guys doing welcome back to our Channel   today we're going to dive into a product that's  getting more and more popular in today's housing   market B lender mortgages we're going to dive  into some of the myths and misconceptions about   B lender mortgages and tell you what it is all  about so let's get started first thing first let's   break it down a B lender mortgage doesn't have  to be that complicated it is not the traditional   a-lender financing which is offered by big Banks  think of it as the cool Cousin It is considered   alternative mortgage financing and it offers  a different kind of helping hand when you need   so let's start with misconception number one B  lenders have crazy interest rate although b lender   rates are slightly higher than A lenders and Bank  lenders offer they're not out there to break the   bank oftentimes a lot of B lenders are considered  Alt A and they offer interest rates that are   1% or 1.5% higher than A lenders or Bank lenders and sometimes depends   on where the interest curve goes their rates  are really really close with what the banks can   offer one thing to keep in mind is some of the B  lenders do have a 1% lender fee which is   not often seen as Bank lenders some people think  B lender rates are double what the A lenders offer   or in like you know 20% or credit card rates that  is simply not true back when the A lender rates   were about 2% the B lenders were offering  something in the 3% range right now   the lender rates are in the high 5s uh low 6% and the B lender rates are in the high   6% and low 7% so now you know  the difference misconception number two B lenders   are only for those people with bad credits that  one is a classic B lender mortgages aren't just   for people who have credit challenges they're also  for people who are new immigrants self-employed   Freelancers or who have unique situations because  B lenders underwrite their mortgages based on a lot   of common sense a lot of the affordability cash  flow not just on your T4 with B Lenders is not   all about credit history they also consider your  overall Financial Story another example is that   we often see a lot of Real Estate Investors  who have multiple properties although their   income alone will not service but a lot of the  B lenders can use a greater amount of their   rental income to help them qualify so we do see a  lot of people who are Real Estate Investors use B   lenders as well the misconception number three  B lenders are only short-term fixes here's the   thing while some of the B lender mortgages are  for short term and they are stepping stones or   you call them Band-Aid financing to help you  get to A lender alot of B lender mortgages are   meant for longer term they do offer from six  months, one year, three year all the way to five   year terms Common Sense underwriting and  tailored options can make B lender mortgage   product very solid choice another benefit from  B lender that can be long term is that for allow   the self-employed professionals they may report  or they may write off a lot of their income on   their tax return they will show a lot of cash  flow when you look at their bank statements   this is where oftentimes when they compare the  tax benefit they get by being self-employed and   by capitalizing on those write-offs versus a  slightly higher rates at a B lender versus a   bank lender oftentimes we see those professionals  stay in the B lender mortgages for a longer period   of time right A lot of them you know doing quite  well with their income doing quite well on their   credit score however just simply they don't  have the traditional verifiable income that   the banks are looking for and that leads to those  folks stay in the B lender for extended period   misconception number four B lender mortgages  are predatory they're sketchy business now it's   time to clear the air a lot of B lenders are  multi-billion dollar businesses they have 20   to 30 billion dollar under management they are  backed by institutional investors a lot of them   are regulated by the same regulator as the banks  which is osfi that's the regulator in Canada for   financial institutions they are called B lender  because their risk appetite is different   than the banks and there are really just servicing a  different demographic and filling different needs   from the Canadian borrowers they're far from the  mom-and-pop shops or anybody who's out to try to   scam borrowers right having that being said always  always do your research make sure you talk to a   mortgage professional about what you're looking  for making sure you read the fine print and walk   through the commitment letter make sure you know  what you're signed up for a lot of things will   impact your cash flow and you need to be aware of  it right one example a lenders do not collect your   property tax on your behalf B lenders would lump  together the mortgage payment and your property   tax payment in one payment make sure you have  that Clarity and know really how much is that   payment for every month and how is that matching  up to your cash flow at Effortless Mortgage our   mortgage advisors always try to break it down  for our borrowers so that they know exactly what   they're in for there's certain benefits with that  it's actually spreading out the tax payments over   12 months is a lot more manageable you need to  know it before you sign the commitment letter you   need to know it and know the cash flow situation  so now we've talked about four misconceptions   about B lender mortgages let's move on and shine  a brighter light on the benefits of B lender mortgages I will talk about two commonly  recognized benefits about B lender mortgages   benefit number one is flexibility B lenders  will allow you to have higher debt to income ratio   that means the total before tax income versus  the monthly debt load that you are paying with A   lenders that ratio has to be 44% and maximum maybe  48 to 49% if you have excellent credit score, with B lenders that ratio can go up to 60% you can  use up to sixty percent of your income to service   your mortgages or sometimes if you have a higher  down payment or you have a lot of equity in your   house it will actually allow you to go beyond  60 it could be 80% or higher if you   actually use your situation flexibility that is a  really big thing another example of flexibility is   credit score not everybody has the perfect credit  it could be a phone bill from two years ago that   you forgot to settle it could be something that  you have a credit card that you're over utilizing   a lot of of those factors can impact your credit  score and if your credit is below 650 mostly   lenders will take a pass on the mortgage whether  it's purchase or refinance B lenders do not have   a minimum credit per se they do review credit  they do have a lot of underwriting about your   payment history but they're a lot more flexible  than A lenders when it comes to credit and really   they can help you consolidate debt they can help  you a really rehabilitate if you're buying property   and your credit is lower than 650 B lender  is really going to be your best bet benefit   number two is that when used correctly B lender  mortgages can help you improve your credit so if   you don't really have a credit history by adding  a secure mortgage to your credit history makes it   really broadens your credit payment history  to any of the future lenders who are looking   at your credit score and your credit report and  if you already own a home and you have a lot   of credit card debt car loans and when you have  a B lender mortgage to help you consolidate   those debts and you're making payments on time  that'll really really improve your credit over   time eventually after 12 to 24 months you can  actually go back to A lender it has to be really   used correctly to really help you improve your  financial situation and that's another really   important point we always always make sure that we  fulfill at Effortless Mortgage our advisors always   review your overall financials to see whether  this B lender mortgage is going to be good for   you and help you improve your credit score help  you better situation help you get over a life   event right so if it really helps you achieve  those goals and at the same time our mortgage   advisors will also help you to work out a plan to  see like are you going to be able to continue to   stay in this B lender mortgage for extended period of time or how do we try to really help you improve   your credit get your record keeping straight and  come up with a plan to help you move to a lower   interest cost solution whether it's a A lender  Alt-A lender credit union smaller Banks you name it   if you're considering a B lender mortgage don't  let the misconception steer you away be informed   be smart talk to your mortgage professional who  is specialized in B lender mortgages and make   the choice that is right for you learn more about  your mortgage options visit effortlessmortgage.ca

Channel: Effortless Mortgage

Views: 491

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Id: GDEFbR3Z3Ds

Length: 9min 37sec (577 seconds)

Published: Sat Sep 16 2023