What is the biggest misconception with using a Mortgage Broker?
One of the biggest misconceptions of using mortgage brokers is that brokers place their residential mortgages with private lenders and not banks. That is misguided information often passed down to borrowers. There are 3 types of residential mortgage lenders that borrowers are placed with.
What are the Different types of Residential Mortgage lenders?
‘A’ Lenders –
‘A’ Lenders are the big name Banks, Credit Unions and Monoline lenders. The big name Banks in the broker channel are Scotia, TD, and ATB. Brokers in Alberta can deal with Servus Credit Union and First Calgary. There are different Credit Unions that brokers have access to in other provinces. Monoline residential mortgage lenders focus their portfolio on mortgages. Several monoline mortgage lenders have Schedule 1 bank status and they are secure and backed by CMHC, Genworth and Canada Guaranty. Examples of monoline mortgage lenders are MCAP, Street Capital, First National and Merix to name a few.
‘Alt A’ or B Lenders –
These are mortgage lenders that are Schedule 1 banks in Canada and their products are geared to help borrowers that have hard to prove income. These borrowers include self-employed business owners, borrowers that may have bruised credit or borrowers that have high debt ratios and therefore don’t meet the ‘A’ lenders guidelines. The Alt A lenders that I deal with are Optimum Mortgage (Canadian Western Bank), Equitable Bank, Bridgewater Bank and Haventree bank. These lenders are banks, they are secure and often require more than 20% down.
Private Lenders –
Mortgage investors are those that lend private money. Private lending is usually the last resort for borrowers who are in a difficult credit situation or they do not fit in the ‘A’ or ’Alt A’ lending guidelines.
Majority of first time homebuyers and borrowers fall into the ‘A’ lending category. Borrowers with provable income and good to excellent credit history therefore have more options. These borrowers can have as little as 5% down for a high ratio insured mortgage. Or they have more than 20% down for a conventional mortgage. Above all, the greatest advantage about working with a mortgage broker is the options for mortgage lending. Each lender has different mortgage policies. For example, some ‘A’ lenders will allow Child tax benefits to be used as qualifying income and some won’t. Some ‘A’ lenders are more flexible than others when using 100% of overtime & bonus income to help borrowers qualify.
The banks pay me; therefore my services as a broker is free of charge. As a broker, I look at your current situation and your homeownership goals and find lenders that will best serve your situation. I do the rate shopping for you with one credit pull! Why not work with a mortgage broker!
Let me show you the different options! For more mortgage information, contact Jacqueline Jeffries with Quantus Mortgage Solutions at 780.220.5968 or email email@example.com for a free mortgage consultation!