Even healthy, profitable business owners can find themselves rejected for small and medium-sized loans by banks, and economic uncertainty can make this problem far worse. The difficulty of getting a loan from a bank is not just a challenge for small businesses – the same is true for individual Canadians that require mortgage lending services.
Why do big banks or credit unions reject loan applications for small businesses? Why do individuals struggle to get a traditional mortgage to achieve their real estate dreams? The answer is related to risk.
Even small risks are sometimes too much for a bank to consider, regardless if you can prove that you can pay the money back over a certain period. If you provide collateral, the bank may still be unsure you’re worth the investment. When considering the added effect of the relatively new mortgage rules, including both a stricter mortgage stress test and higher down payment levels, it is clear that another option is necessary.
When you need access to financing and get approved in a timely manner, the question ultimately becomes: “What should I do, and where can I turn for an alternative loan?”
Burke Financial connects Ontario residents with alternative mortgage solutions. Consider the many benefits of being paired with an alternative lender.
What is an Alternative Mortgage Lender?
The alternative lending space is comprised of financial companies or individuals working outside of the area dominated by traditional lenders like banks, catering to clients who cannot qualify with a traditional lender.
Alternative lenders can be either a financial institution or an individual private lender. Some alternative lenders use a peer-to-peer model to connect people who need money with investors, while others are payday loan providers (which are very common).
Alternative lenders often charge a higher interest rate than the banks since they are willing to take on more risk (such as with individuals like poor credit, etc.). The fees and loan structures will vary among alternative lenders.
The process of figuring out who is the best mortgage lender for you can feel overwhelming, especially if you’re a first-time homebuyer. The good news is that you don’t have to do the research alone. There are quality resources available to help you understand how to find the right mortgage lender.
What is an Alternative Mortgage Lender?
The alternative lending space is comprised of financial companies or individuals working outside of the area dominated by traditional lenders like banks, catering to clients who cannot qualify with a traditional lender.
Alternative lenders can be either a financial institution or an individual private lender. Some alternative lenders use a peer-to-peer model to connect people who need money with investors, while others are payday loan providers (which are very common).
Alternative lenders often charge a higher interest rate than the banks since they are willing to take on more risk (such as with individuals like poor credit, etc.). The fees and loan structures will vary among alternative lenders.
The process of figuring out who is the best mortgage lender for you can feel overwhelming, especially if you’re a first-time homebuyer. The good news is that you don’t have to do the research alone. There are quality resources available to help you understand how to find the right mortgage lender.
How to Find the Right Mortgage Lender
The majority of homeowners in Canada are unaware of how to find a mortgage lender, especially if they’re first-time home buyers. If they’ve only listened to traditional lenders, they’re likely under the assumption that only well-qualified borrowers get approved. The reality is that there are several options available for mortgage holders, even for those with low credit scores.
If you’re wondering what your options are or what to look for in a mortgage lender, the key is to work closely with an experienced mortgage broker. The landscape of mortgage lending can become overwhelming for potential buyers, especially if their finances aren’t stable.
Working with a brokerage like Burke Financial means you’re partnering with an experienced negotiator and an expert in mortgage services. They’ll tap into their network of banks and private lenders to ensure you’re getting the best possible rate and help you avoid being taken advantage of by greedy lenders.
Why Should I Use an Alternative Lender?
Unfortunately, banks often are not concerned about your financial shortfalls. They will typically only work with well-qualified borrowers.
Even if the bank is willing to provide a loan, there are drawbacks. Loans from banks come with strings attached, there is a lot of paperwork to do, and it costs you one of the most valuable resources you have: your time. The delays in asking for and receiving a bank loan can be the difference between success and failure.
Alternative mortgage lenders can change that.
Thankfully, many reputable organizations specialize in alternative lending that you can trust to get you the money you need quickly and easily. They are there to connect you with the financing you require and to capitalize on all the missed opportunities left by the banks. After all, who needs a traditional mortgage with traditional mortgage rates when a better solution is available?
So, what is an alternative mortgage lender going to do for homeowners that traditional lenders can’t provide? It’s about convenient, safe borrowing options that don’t require the extensive time, paperwork, and bureaucracy often found with conventional resources such as banks.
Alternative lenders (and alternative mortgage lenders) can be useful in several significant ways, but four specific reasons stand out.
Alternative Lenders Work Quickly
Although every alternative lender is different, some can even connect you with the money you need within 48 hours. The key to their speed and convenience is sometimes related to their partners’ partners, and other times it is due to their technology.
Alternative Lenders Have Competitive Rates
It’s true that some alternative lenders will be unable to offer you an interest rate as low as a bank can, particularly if your credit history is slightly bruised.
That said, as long as you’re working with a knowledgeable mortgage broker who knows how to negotiate on your behalf, you can still get an excellent interest rate. The interest rates are certainly better than what you would pay on a credit card. The best interest rates are often offered to those who have collateral like a house or a car, which lowers the borrower’s risk profile in the lender’s eyes.
Everyone’s situation is different, so when searching for an alternative lending solution, try to find one that can customize their rates based on your situation. You’ll want to avoid lenders that offer a one-size-fits-all approach.
Alternative Lenders are Open and Transparent
You want to be able to trust your lender, whether they are a bank or not. A great way to develop a trusting relationship is to be as transparent as possible concerning fees and costs. If your lender can’t tell you exactly how much things will cost you before signing the paperwork, don’t work with them.
Alternative Lenders Are More Forgiving of Bad Credit
Good alternative lenders and mortgage brokers understand that big banks are leaving an incredible opportunity on the table for them by being so risk-averse in the Canadian market.
By refusing loans to specific individuals, whether that borrower has a good or a less-than-stellar credit score, they end up leaving the door open for alternative lenders and borrowers to develop a win-win financing situation.
Finding ways to work with borrowers with bad credit allows alternative mortgage lenders to make a small profit, while the borrower gets access to financing otherwise unavailable. Burke Financial is an award-winning brokerage that offers substantial financial solutions, including options for home equity loans, mortgage debt consolidation loans, refinancing, and more. With our expertise, we can show you how to find a mortgage lender that fits your situation.
What Happens to an Alternative Mortgage Lender When Clients Default?
It’s essential to understand what can happen if you default on your loan. Defaulting refers to when a borrower cannot keep up with their monthly payments, putting the terms of their contract in jeopardy.
In the case of default, your lender would attempt to reach you, either via phone or email, to inform you that your payments are overdue. If they don’t receive any communication in return, their attempts will become more frequent and could escalate.
Some lenders will choose to exercise their right to a Power of Sale or foreclosure. The details will often depend on the province and your contract terms. Others may be more willing to work out an arrangement if you’re in regular communication. To avoid reaching this point, you must work closely with your mortgage broker to ensure your loan terms are realistic.
What Information Does an Alternative Lender Require?
Unlike the process of obtaining a bank mortgage or bank loan, an experienced mortgage broker will make things simple for you. It’s one of the most significant advantages they have over the big banks. By partnering with an experienced mortgage broker, you’ll have the insight and tools that traditional lenders wouldn’t have the courtesy to provide their borrowers. They’ll help you understand exactly what to look for in a mortgage lender.
A company like Burke Financial offers one of Canada’s most convenient application processes. To apply, all you need to do is provide three pieces of information:
- Your name, email and phone number
- The type of loan you’re looking for (e.g. home equity, debt consolidation, etc.)
- The loan amount
The borrowing process doesn’t have to feel overwhelming, and you don’t need to stress over finding the right mortgage lender — especially when you have an experienced mortgage brokerage guiding you through every step. With Burke Financial, it’s that easy to get the money you need.
Get Your Money Easily with Burke Financial
Burke Financial is one of Canada’s leading mortgage brokerages for a reason. We help homeowners find mortgage refinancing services in Toronto and across the country. We’ve helped thousands of people reach their goals, make payments on their debt, and utilize the equity in their homes by connecting them with the right financing at the right time.
Throughout the borrowing process, we will help you understand how to pick a mortgage lender that has your best interests in mind.
If you are an individual or a business owner that is tired of being rejected by banks, or if you need money right away without having to jump through hoops, then reach out to Burke Financial today and see what we can do for you.
Call Burke Financial at 1-877-709-0709 or apply online today.
