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Canadian Mortgage Lenders
Mortgage Lenders in Canada
Canadian mortgage lenders provide a wide range of financing products: from short-term bridge financing to 25-year amortized residential mortgages. Whatever your financing needs, a Canadian mortgage broker will be able to ascertain the best mortgage lender in Canada to provide the loan product you are looking for.
Mortgage lenders in Canada lend finances on the basis of several different requirements. Most mortgage lenders are looking for three key items in a borrower:
- Credit score
- Down payment
- Financial ability to make future payments
Private mortgage lenders are often more lenient when it comes to credit score. Private lenders are looking for commercial or residential projects that show a profitable outlook and provide a well-made business plan stating clearly the projected earning potential of the site. A private lender may be the best option if one of the following factors is relevant:
- Financing is needed within a shorter timeframe than a bank or conventional loan can be secured
- Financing is needed to hold a property while a loan is being secured
- Credit score is under that required by a conventional mortgage lender
- The project that requires financing is riskier than a conventional mortgage lender is comfortable with lending toward, but poses promising returns
High Ratio and Conventional Mortgages
The chief determinate in the best rate a mortgage lender will offer a potential borrower is the risk they are taking on by funding that borrower's request. The less capital a borrower is providing toward the down payment of their property purchase, the greater the financing the mortgage lender is providing; thus the greater risk the mortgage lender is taking on.
When 20 per cent or less of a property value is procured toward down payment by the buyer, the loan the mortgage lender is providing is said to be high-ratio. This is because the loan to value (LTV) ratio is decreased in proportion with the percentage of the property value the mortgage lender is contributing. The less the sum being put down, the greater the LTV.
On property purchases where 20 per cent or more of the property value is provided by the buyer, the loan is said to be conventional. Conventional mortgages are usually granted by mortgage lenders at a lower interest rate than a high-ratio mortgage is provided, as the borrower has demonstrated to the mortgage lender that they are financially capable of supplying a significant portion of down payment toward their property purchase.
Mortgage lenders in Canada are now required to only provide high-ratio insured mortgages on the basis of specified qualifications. This means that in order to qualify for a high-ratio insured mortgage from a Canadian mortgage lender, a borrower must qualify to meet the greater of either the chartered-bank-five-year posted rate or the contract rate.
Some Canadian mortgage lenders are also applying these qualifications to conventional mortgages.
Canadian mortgage brokers have access to a large network of Canadian lenders. When you apply for your mortgage or financing through a national brokerage, they will compare your needs with the products available through various mortgage lenders in the country. Mortgage brokers have access to both large-scale mortgage lenders and small mortgage lenders, as well as private lenders.
When finding the mortgage lender that will finance your property purchase or commercial project, be sure to ascertain the limitations and restrictions that are attributed to their financing products. You can pay off your mortgage loan much faster, with less of your payments going toward interest, with a mortgage lender that allows the option to make pre-payments or lump sum payments at any time.
Also be sure that the mortgage lender you choose offers portability should you decide to move or sell your home.
Most mortgage lenders in Canada are accessible online. Take the time to look at the websites of several mortgage lenders to get an idea of the loan products they are offering. You can find a list of the approved mortgage lenders in Canada on this website.
With so many mortgage lenders available, this process may seem time consuming and stressful. A mortgage broker will do the groundwork work for you. They will examine all of the product offerings available from tens of mortgage lenders and deduce, from your specific situation, which mortgage lender will provide you a product that meets your terms, offers flexible options, and provides you with the best mortgage rates available.