There was an article published in the Globe and Mail last
week that addressed a common concern. That concern is for borrowers who are
looking to obtain a mortgage from a smaller
or less recognizable lender.
www.christinebuemann.com
Although many people have only heard of the "Big 6" banks, there are many lenders who deal exclusively in mortgages.
They do not have the overhead costs of the day-to-day banking and can generally
offer lower rates without taking away any important features (portability,
assume ability ext.). They are also accessible through a Mortgage Broker who
will work for you and can help you determine what your best options are as
opposed to someone who works for the bank. Many of these lenders have been
around for years and have very reputable track records. People also tend to
recognize banks which have a physical branch in their communities. There are
however, several very large banks who may provide a higher quality service but
simply do not have a branch at that location.
The fear that some people have is that their lender will
cease to exist and that they will lose their homes. That simply is not the case
with “prime” lenders. The “sub-prime” market is higher risk environment that is
focussed on borrowers who cannot qualify with a prime lender. There are
numerous reasons for being unable to qualify, but the most common are poor
credit or lack of provable income. This type of mortgage is a short term
solution and works best for those who have a clearly defined exit strategy.
They need to set goals as to how they will improve their situation in a timely
manner in order to switch to the security of a prime lender as soon as
possible.
I strongly believe that not only should consumers not fear
the smaller lenders, but we should embrace them. They add diversity to the
mortgage industry and allow consumers to have more choice and therefore
control. The more options that are available in the Canadian mortgage market,
the more competition there is for business and this can be of real benefit for
those looking for low rates combined with great products.
I suggest reading this article which describes in further
detail the fact that consumers should not fear the smaller lenders. http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/dont-fear-the-small-mortgage-lender/article4462402/
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