B-Lenders | The Next Best Option!
B-Lenders fill the gap when conventional mortgage lenders like banks wont approve your application. With the recent B-20 lending guideline changes made January 1st, 2018 B-Lending may become more popular option for clients. B-Lenders tend to be more flexible on credit, including Bankruptcies & consumer proposals as well as self-employed income or stated income clients. B Lenders in Canada have to rely more heavily on the equity in the property.
What Do B-Lenders Do
B Lenders take on clients with slight issues with providing proof of income or mild derogatory credit. These types of lenders primary lend in urban areas so if you are in a smaller town you likely will fit in with one of your private lenders. Banks take on the clients that can provide income proof and credit worthiness that will bring a comfort level that they will see no payment interruptions during a term. So, what do you do if you are self-employed or earn money in a way that you cannot always show in a conventional manor? You need equity! Generally, you will require 25% equity in the home to qualify under a Canadian B Lenders but there are programs that will enable clients to borrow up to 80% of the home’s value.
General B-Lender Guidelines
- Lend up to 80% Primary home
- Lend up to 75% Second home
- Lend up to 75% Rental home
- Minimum Beacon Scores 500
- Previous Bankrupt: as little as 1 day discharged
- Debt Service Ratios average 45/50 Higher on exception (case by case)
- Alternative Income Options: Will accept a variety of income options. (must be able to provide documented proof of income)
- Proceeds to Pay Out: Consumer Proposals, Income Tax Arrears, Property Tax Arrears
- Rental Income: Higher Add backs to income than Banks.
- Self-Employed Income: Allows less time in industry as little as 6 months to 12 months bank statements. Equity options at 50% LTV
B-Lenders Mortgage & Private Mortgage Lender
So you have gone to the bank and they said no. Generally, when looking for B Lenders in BC you must go through mortgage broker channels. So, what happens if B Lenders turn you down as well? There are a few options to look at. Your mortgage broker can go back to a B Lender to see if they have a comfort level at a lower Loan to Value, say 50% & and top up the rest with a private mortgage. A private lender in BC is a useful tool to brokers, allowing home owners to leverage real-estate with the power of a home equity loan. Canadian Private Mortgages do have costs associated with them but are generally used as a short-term solution to a mortgage problem. In most cases they are used to secure the financing now in hopes to improve the credit or income challenges of the client. In the future usually one to two years once the problem has been rectified we refinance the mortgage out at a bank at today’s best mortgage rates.
B-Lending should be used as short term financing. Learn more hear on tips to on how to improve your credit