The Star article on private lenders

Some comments I made about the changing lending landscape.  Click on the link below.

Private lenders step into Mortgage void left by banks.

The article was good and shed some light on just how much the federal government has tightened the Mortgage rules in Canada.  But the article excluded one very important fact.

loan sharkYes, I agree that the govt has gone overboard with their rule changes, and has forced qualified mortgage borrowers to pay higher rates and fees by having to go to alternative lenders.  But, consumers don’t necessarily have to go from an “A” lender with the best rates (currently at around 3.00%),  to a “C” lender with rates of around 12% to 15%.

There are “B” lenders that offer mortgages with only slightly higher rates. Usually 1% to 2% higher than “A” lenders.   I think it’s important to point this out.

A recent example is where one client was self employed, had a slightly bruised credit score of 602 (a good score is between 680 and 720), and his net income was not high enough to qualify (remember, self employed show a lower net income because they can write off more expenses). We found this client an 80% loan to value mortgage at 4.00% with some fees.   His net annual rate was 4.25%.  

So the message is, ‘There are ‘B’ lenders to fill the void left by the BANKS’…. and their rates are only slightly higher..  There are also ‘C’ lenders that fill a need for even harder to place mortgages…. These products come with much higher rates and fees.. But most consumers will either fit into an ‘A’ or ‘B’ product.   Only a small handful of applicants need to go to a ‘C’ Lender..

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

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