What is B-lending
Here at Mortgage Suite we have access to all the different types of lending we have here in Canada–from triple A and B-lending to private.
The B-Lending market is one of the more flexible lending tiers that mortgage brokers have access to. This tier of lending can be much different then what most borrowers imagine when they think of a traditional mortgage they would get at their Bank. B-lenders have higher interest rates, need at least 20% down for purchases and there is frequently lender and brokerage fees associated with them where you wouldn’t have any with triple A. However, they have access to products like “business for self stated income“, extended ratios, and solutions for bruised credit.
A stated income mortgage is designed for borrowers who are self employed and cannot provide traditional income verification. An example of this is a contractor who has a large cash portion of their income. If this income is not claimed, a Mortgage Broker can use 6- 12 months of the client’s business bank statements showing their total deposits to “state” the income and use the true income the borrower is earning.
B-lenders also utilize what is called “extended ratios”. In order to understand extended ratios you first need to know what your “ratios” are. When you go to qualify with a triple A lender one of the three main conditions that need to be met is that your income-to-debt service ratios need to be below 39% GDS and 44% TDS, this means that no more than 39% of your gross income can be used to service the subject property itself (the new mortgage payment, property taxes and heating) and no more than 44% of your gross income can be used for the property itself in addition to all external liabilities (credit card payments, car payments, student loans etc.). If your “ratios” are higher then 39% and 44% then mortgage brokers can use a B-lender’s extended ratios to go up to 45% and 50%, allowing significantly more room for borrowing.
Lastly, if you have a history of poor repayment resulting in a lower credit score then B- lending is still an option for you. At Mortgage Suite we have access to B-lenders with no credit score minimums. If you have a bankruptcy in the past, debts in collections or an active proposal we can still provide clients with options to get them financing through B- lenders.
Typically the term with a B-lender is short, between 1-3 years. During this time we help work with our clients to build back credit and plan and exit strategy to get them with a Triple A lender