Mortgages have traditionally been financed in Canada by banks and credit unions that also offer deposit accounts and insurance products. However, today’s Canadian homeowners have plenty of options when applying for mortgages.
Fortunately, financial firms are continuing to develop innovative mortgages that meet the different needs of borrowers rather than pushing consumers to comply with rigid norms. As a result, rather than being excluded from homeownership totally, more people are able to obtain the necessary finance to purchase a home.
Some of the most popular mortgages today are alternative mortgages. But what exactly is an alternative mortgage, what are its benefits, and how can you choose the best alternative mortgage lender? Let’s find out.
What Is an Alternative Mortgage?
An alternative mortgage is any mortgage that does not match the threshold of a traditional home loan. Alternative mortgages may have variable interest rates rather than fixed interest rates and they may charge higher rates than traditional types of mortgages.
This type of mortgage is ideal for borrowers who don’t qualify right away through banks yet still want to buy your dream home. What’s more, these home loans require a minimum down payment of 20% or more.
Who Is an Alternative Mortgage Ideal For?
An alternative mortgage is an ideal alternative for many people who would be, or have been turned down by a bank. When you engage with a reputable mortgage broker, you have a plethora of options. You will have access to a wide range of alternative mortgage options to meet your specific circumstances, whether you’re a first-time buyer, self-employed, or have a lower credit score.
Rather than waiting to make a purchase or refinancing, an alternative mortgage can help you acquire the inexpensive funds you need right now to purchase a home, especially if you opt to work with a mortgage broker.
Benefits Of Getting an Alternative Mortgage
Here are some of the biggest benefits of alternative mortgages.
Tolerance for poor credit history: Non-traditional lenders reserve their lowest rates for persons with poor credit histories. Private mortgage lenders in BC, Canada may even consider lending you money if your credit score is 500 or lower, which is something that regular lenders will not consider.
Faster approvals: When applying for an alternative mortgage, a first-time homebuyer might not need to have proof of income or assets. As a result, the time it takes to get approved for one of these loans is usually shorter than traditional mortgages.
Flexibility: An alternative mortgage can offer more flexibility than a standard fixed-rate mortgage. For example, an interest-only mortgage or a payment schedule with a longer term can provide more flexibility if you have a large amount of money in savings and want to make larger payments over time. If you are self-employed and have a variable income, you may be able to obtain a variance mortgage to fit your fluctuating income.
