Alternative Lending Provides you with Options

Alternative lending refers to any lending practices that fall

outside the normal banking channels. Alternative lenders think

outside the box and offer solutions to Canadians who wouldn’t

otherwise qualify for traditional mortgage financing.

In an ideal world, we’d all qualify for the best mortgage terms

available. However, this isn’t the case. Securing the most

favourable terms depends on your financial situation. Here are

a few circumstances where alternative lending might make

sense for you.

Damaged Credit

Bad credit doesn’t disqualify you from mortgage financing.

Many alternative lenders look at the strength of your

employment, income, and your downpayment or equity to

offer you mortgage financing. Credit is important, but it’s not

everything, especially if there is a reasonable explanation for

the damaged credit.

When dealing with alternative lending, the interest rates will

be a little higher than traditional mortgage financing. But if the

choice is between buying a property or not, or getting a

mortgage or not, having options is a good thing. Alternative

lenders provide you with mortgage options. That’s what they

do best.

So, if you have damaged credit, consider using an alternative

lender to provide you with a short-term mortgage option. This

will give you time to establish better credit and secure a

mortgage with more favourable terms. Use an alternative

lender to bridge that gap!

Self-Employment

If you run your own business, you most likely have

considerable write-offs that make sense for tax planning

reasons but don’t do so much for your verifiable income.

Traditional lenders want to see verifiable income; alternative

lenders can be considerably more understanding and offer

competitive products.

As interest rates on alternative lending aren’t that far from

traditional lending, alternative lending has become the home

for most serious self-employed Canadians. While you might

pay a little more in interest, oftentimes, that money is saved

through corporate structuring and efficient tax planning.

Non-traditional income

Welcome to the new frontier of earning an income.

If you make money through non-traditional employment like

Airbnb, tips, commissions, Uber, or Uber eats, alternative

lending is more likely to be flexible to your needs.

Most traditional lenders want to see a minimum of two years of

established income before considering income on a mortgage

application. Not always so with alternative lenders, depending

on the strength of your overall application.

Expanded Debt-Service Ratios

With the government stress test significantly lessening

Canadians' ability to borrow, the alternative lender channel

allows expanded debt-service ratios. This can help finance the

more expensive and suitable property for responsible

individuals.

Traditional lending restricts your GDS and TDS ratios to 35/42

or 39/44, depending on your credit score. However,

alternative lenders, depending on the loan-to-value ratio, can

be considerably more flexible. The more money you have as a

downpayment, the more you’re able to borrow and expand

those debt-service guidelines. It’s not the wild west, but it’s

certainly more flexible.

Connect anytime

Alternative lending can be a great solution if your financial

situation isn’t all that straightforward. The goal of alternative

lending is to provide you with options. You can only access

alternative lending through the mortgage broker channel.

Please connect anytime if you’d like to discuss mortgage

financing and what alternative lending products might suit

your needs; it would be a pleasure to work with you.