Secondary Mortgage Lenders More In Vogue
“Recent Changes To Canadian Mortgage Regulations Have Started To Moved Borrowers Down Market”
With all the changes coming into effect for mortgage lending from institutional lenders, more and more borrowers are considering alternative lending options from “B” lenders and private lenders.
More specifically, the changes to mortgage regulations cutting back insured mortgages to 85% of the property value for insured mortgages and the discontinuance of mortgage insurance on home equity lines of credit, have started moving lenders from “A” lending products to alternatives down market.
For instance, most private mortgage lending for second mortgages to provide incremental capital, primarily for debt consolidation of some sort.
Traditionally, an “A” profile lender would go to the bank and get an insured mortgage product to provide the additional capital required either in the form of a new first mortgage, a standard term second mortgage, or a home equity line of credit.
With the rule changes, individuals are not going to be able to secure the same level of financing and may turn to private mortgages instead to get funds in place faster, even at a slightly higher cost.
The same can be true to some of the lending products now being offered by secondary institutional lenders who are still governed by the recent rule changes, but are providing different lending products to generate greater overall leverage, which is the key issue for people looking for additional mortgage financing.
While most private lenders are reluctant to go beyond 75% to 80% loan to value on a first, there are those that will go as high as 90% on a smaller second, especially when the borrower has “A” credit and good cash flow.
Add to this the speed in which a private mortgage can be completed, and a case can easily be made to now consider these forms of “alternative mortgage financing” if you can’t otherwise qualify for enough financing from your bank or primary institutional lender.
Once again, this is not going to generate any type of mass shift in the market, but for those individuals who 1) what maximum leverage against their home equity, and/or 2) don’t have the time to go through the bank process which may see they qualify at a lower amount anyway, alternative financing options or the down market has now become more attractive to lower risk lenders.
If you would like to explore alternative financing options to maximize your home equity mortgage financing, I suggest that you give me a call so I can quickly assess your requirement and provide relevant mortgage options for your consideration.
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel