Most people in Canada buy homes with mortgages. A mortgage becomes necessary if you are unable to pay out of pocket. It decreases financial strain and gives you more resources to save money. What are the top mortgage lending sources to finance your home? Let’s find out!
- Private Loans
As the name indicates, it is a type of mortgage that source funds from another person or company instead of borrowing from a bank. Most private mortgage loan lenders in Canada provide timely loan approval, attractive rates, and flexible payment terms.
You get the same security as you would with a standard lender or a bank. In most cases, a private loan enables you to quickly access the housing market with less than 20% down payment.
It is a short-term loan funded by private investors compared to banks and credit unions. Usually, the terms are around 12 months. However, you can negotiate with loan lenders to extend the duration for 2 to 5 years.
2. Mortgage Companies
There are various benefits of using a mortgage company for your house loan. They have access to a wide range of mortgage products than a full-service bank. Such companies specifically provide mortgage loans, which means they streamline their processes much better than banks.
Since mortgage companies are less strictly regulated than banks, they can customize loan recommendations to borrower’s exact home-buying goals and financial scenarios. Other benefits include more lending expertise, more loan options, better advice and guidance, negotiations on terms, and faster loan closing.
3. Credit Unions
The biggest perk of borrowing home mortgage loans from credit unions is that they don’t sell your mortgage. It is because they use ‘in-house loans’ to generate interest income instead of selling your loan for a one-time free. So, you will deal with the same service company for the life of the loan.
When you are a customer of a credit union, the chances are that you will see reductions in closing costs and fees with your mortgage origination. Unlike banks and private mortgage loans, credit unions hold the loan ‘in-house’ and give you a slightly lower rate. Credit unions usually operate as non-profit organizations, and that’s why their rates are lower.
4. Banks Caisses Populaires
They are member-owned financial companies, which offer cooperative banking as well as provide investment, lending, and insurance services. Bank Caisses Populaires are Canadian financial institutions, which are not owned by shareholders. A populaires is similar to a credit union and controlled by its members.
Banks Caisses Populaires give you advice and guidance tailored to your financial situation. Combined with great rates and affordable mortgage loans, a populaires is your financial partner that gives you more flexibility and multiple refinancing options. It is likewise beneficial for first-time home buyers.
5. Mortgage Brokers
Mortgage brokers offer loans from lenders on a wholesale basis. They provide affordable rates available in the market. Using a mortgage broker is beneficial for the borrower because the broker has knowledge about the market and access to many lenders.
A broker can even give you advice about lenders that will consider your case and make the entire process easy and hassle-free. This, in particular, is beneficial for you if you have poor credit ratings.
In Canada, mortgage brokerage is rapidly becoming more popular and considered a much better option for people looking to get the lowest possible rates. Even a 0.5% decrease in the mortgage rate will save you a lot of money in interest charges over the mortgage life. This gives more purchasing power. Therefore, it is worth considering mortgage brokers because they can help get you a better rate.