There are many reasons why you wouldn’t want to take a mortgage from a conventional lender. It could be because you are self-employed or lack a good credit score. Sometimes the wait to get the mortgage approval is too long. In such a situation, you should approach a B lender to take out a mortgage. If you are someone who has never taken a private mortgage, then you might have multiple questions. Lack of knowledge can also make things not so easy. It is always best to reach out to a Certified Mortgage broker like https://certifiedmortgagebroker.com/b-lender-mortgages-toronto-ontario/. They will help you to find the best B lender mortgage offers. However, before making a final decision it is always best to know of the advantages and disadvantages of taking a mortgage from a B Lender.
Advantages
An alternate method of mortgage: Inability to meet criteria set by the traditional lenders can hinder you from getting a mortgage from them. This could be because of type of income, poor credit score, unconventional down payment, high debt servicing ratio or you’ve filed for bankruptcies in the past. In all these situations, reaching out to a B lender will help you to get the alternative solution that you require.
Short-term Mortgage: A typical mortgage is for about 5 years. However, the mortgage which is offered by B lenders is short term, which means that it lasts between one to three years. A short-term mortgage, allows the borrower to transfer to a traditional lender without paying a heavy penalization account.
Flexible Rules: When you are taking a mortgage from a traditional lender they have very stringent rules. In the case of B lenders, the opposite holds. They take the debt servicing ratio to be more affordable. The lenders allow non-conventional sources of income and also accept down payments from various sources. This flexibility makes up for the slightly higher interest rate.
Disadvantages
Appraisal of the property: To take a mortgage from a B lender, you are required to get the appraisal on the property, irrespective of the refinance or purchase. This applies to almost every type of mortgage. Though getting an appraisal done might seem like exploitation, it is the extra closing cost that you will have to pay when your application has been turned down by the A lenders.
High Down payment amount: For taking a mortgage from a B lender, you have to pay at least 20% as the down payment. This might not seem like a problem when you are refinancing. However, when purchasing a new property this requirement of a necessary down payment can impact your budget especially when you have planned a minimal amount of 5% or 10% as a down payment.
Lack of Information: One of the disadvantages of B lenders is that getting information about them is not as easy as getting information about traditional lenders. The main reason behind this is that the products offered by B lenders are usually not advertised.
