Are you one of the many Calgarian borrowers turned down by traditional banks? If so, you need to work with a professional Private Mortgage Lender in Calgary or B-Lenders.
Let us understand the difference between both to help you make the right decision for your financial situation.
Who are the B-Lenders?
B-Lenders are the alternative mortgage lenders in Calgary and are regulated, and offer mortgage products to borrowers with slightly lower credit scores or non-traditional income sources.
They have strict bank policies and are ideal for
- Borrowers with a weakened credit profile
- Self-employed individuals with fluctuating income
- Borrowers with high-debt ratios
- Newcomers to Canada who do not have a long credit history.
The B-Lenders offer better interest rates than the private lenders. They require default insurance and thorough documentation.
Who are Private Lenders?
They are the individuals or companies who lend out their own money. They are not the banks or financial institutions, but are used as a last option by borrowers who do not qualify for traditional banks and B-Lenders.
The private lenders in Calgary evaluate risk based on the value of the property rather than the creditworthiness of the borrower. They are an ideal option for
- Borrowers with bad or no credit
- Those facing foreclosure
- Those who need funds during an emergency
- Short-Term bridge loans.
However, the private lenders charge higher interest rates, shorter loan terms and extra fees like broker or lender fees.
What is the difference between the Private Lender and the B-Lender?
· B-Lenders are regulated financial institutions, including credit unions or trust companies. The Private Lenders are the private corporations or individuals not regulated like brands.
· The B-Lenders accept fair to moderate credit. The private lenders do not have strict credit checks and are suitable for poor or no credit.
· The B-Lenders need many documents, including income proof, tax documents and verification of employment. The private lenders need minimal documents and are more focused on the property value.
· The moderate interest rates are higher when you go for B-Lenders, while the private lenders charge high interest rates due to increased risk.
· The loan term for B-Lender is typically 1 to 5 years, and for a private lender is six to twelve months.
B-Lender v/s Private Lender in Canada- Which one is the best Fit?
B-Lender is an ideal option for borrowers who do not qualify with traditional banks and have fair credit scores and stable income. These lenders offer competitive interest rates, longer loan terms and require standard documentation like proof of your income and tax returns.
A Private Mortgage Lender is an individual or company offering short-term loans. They focus more on the property value than the borrower’s credit score. The approval is fast but comes with higher interest rates and additional fees.
Which is the best fit?
If you have moderate credit and documentation, choose B-Lender. If your situation requires flexibility and fast funding despite higher interest rates, opt for private vendors.
B-Lenders and Private Lenders play a key role in the real estate financial landscape of Calgary. Work with a professional mortgage advisor to navigate the options easily and get the best deal suited to your needs.