What’s the difference between A lenders, B lenders?
A lender
When you’re looking for a mortgage, there’s a variety of different lenders out there. “A lenders,” or traditional lenders, refer to banks and credit unions that cater to customers with good credit scores and a reliable income — these are considered an “A” clientele. The majority of people looking for mortgages have traditionally gone to these lenders.Institutions servicing an “A” clientele include Canada’s major banks — e.g., BMO, CIBC, National Bank of Canada, Scotiabank, RBC, and TD. These banks are subject to federal regulation, which means that you’ll be stress tested when you apply for a mortgage. The stress test involves finding out if applicants can afford to pay interest at either the five-year average posted rate, or two percentage points higher than the rate their bank or broker offers them — whichever is higher
B lenders
There are more than six banks in Canada, obviously. Equitable Bank and Home Capital are examples of institutions that offer options for a“B” clientele.
These institutions offer a lower barrier of entry to qualifying for their products, but can offset that with higher interest rates. In short, they cater to people who may not qualify for say, a mortgage or a credit card at one of Canada’s six big banks, because they lack either a strong credit history, or a guaranteed income (recent immigrants, or the self employed, for instance).But when it comes to mortgages, the deal might be worse.
Denise can help you through this very confusing and intimidating process! Call today for help & direction! 416•629•5363 denise@mortgageinthecity.ca
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