Lenders are often grouped as A, B and C. Speak with Puneet Mann, a Mortgage Agent Level 2 in Brampton.
Get in touchMortgages from banks, credit unions and trust companies, generally offering the lowest cost of these three groups. They follow established requirements for income, credit and affordability.
Who it may suitBorrowers with documented income, established credit and sufficient down payment or home equity. Many applications also require a stress test, qualifying at a higher rate than the mortgage’s actual rate.
Banks, trust companies and other lenders offering more flexibility in income documentation or credit history. This generally comes with higher borrowing costs than A lending.
Who it may suitBorrowers whose circumstances fit an alternative program, such as business owners using additional records to support their income, or people rebuilding their credit.
Mortgage investment corporations, private companies and individuals providing short-term mortgages, typically for one or two years. Costs are generally higher, and payments are often interest-only.
Who it may suitBorrowers with sufficient property equity, a short-term financing need and a realistic repayment plan. Both affordability during the term and repayment at the end need to be assessed.
These are broad comparisons. Requirements, costs and terms vary by lender and mortgage.
| Compared | A · Banks and credit unions | B · Alternative lenders | C · Private lenders |
|---|---|---|---|
| Who lends | Banks, credit unions and trust companies | Banks, trust companies and other mortgage lenders | Mortgage investment corporations, private companies and individuals |
| What they assess | Income, credit, debts, property and down payment | Income, credit, debts and supporting business records | Property equity, affordability and repayment plan |
| Flexibility on income and credit | Generally more limited | More, depending on the program | Varies by lender and repayment plan |
| Relative borrowing cost | Typically lowest | Typically higher than A | Often highest |
| Term length | Varies by mortgage | Varies by mortgage | Typically one or two years |
| Payments | Usually principal and interest | Depends on the mortgage terms | Often interest-only |
| Mortgage default insurance | Available for eligible mortgages | Depends on lender and mortgage program | Generally uninsured |
| Agent licence required in Ontario | Level 1 or Level 2 | Level 1 or 2, depending on lender | Mortgage Agent Level 2 |
A mortgage recommendation must suit your needs and circumstances. These are the points it should explain.
In Ontario, a Mortgage Agent Level 1 can arrange mortgages with financial institutions, including banks, credit unions and trust companies, and with CMHC-approved lenders. This includes many alternative lenders.
A Mortgage Agent Level 2 can also arrange mortgages with private lenders. Puneet holds this licence, allowing him to work across all three types of lending.
A B lender may offer a program that accommodates your income documentation or credit history. Private lending may suit a short-term need where lower-cost financing is unsuitable or unavailable. The choice should account for affordability, total cost and how the mortgage will be repaid.
Often, yes. Interest-only payments cover the cost of borrowing while the principal balance remains owing. Some private mortgages add interest and fees to the balance instead of collecting regular payments. Check both the payment schedule and the amount due when the term ends.
An exit strategy is a realistic plan to repay a short-term mortgage when it ends. For a private mortgage, it should be assessed before you commit. It may involve qualifying for lower-cost financing or selling the property, with enough funds to cover the mortgage and associated costs.
It may be possible if you meet the bank’s requirements at the time. Moving involves a new application and a review of your income, credit, debts and property. Compare the costs of switching, including any charge for leaving your current mortgage early.
Contact your lender and mortgage agent promptly. Missed payments can lead to additional charges and legal action, including power of sale, where the property is sold to repay the mortgage. If you receive a legal notice, seek advice from an Ontario lawyer promptly.
Depending on the arrangement, the brokerage may receive compensation from the lender, charge the borrower a fee, or both. Ontario rules require written disclosure of applicable fees and compensation. Review who receives each payment, who pays it and how it is calculated.
02InvestorsFinancing for your first rental or next investment.
03First-time home buyersUnderstand your budget and plan your first purchase.
04Moving homesPlan your next mortgage around your sale and purchase.
05RefinancingReview home equity, refinancing and renewal options.
06New to CanadaPlan a mortgage around your status, income and credit.