• Why Choosing an Alternative Mortgage May Be a Smart Move


    When looking for a mortgage, many people turn to major banks such as Scotia and TD, assuming that these lenders will be their best option. However, in today’s lending environment, many individuals are finding it more difficult to obtain traditional mortgages due to factors such as high debt, poor credit, and limited paperwork. In these situations, an alternative mortgage may be a good option. In this article, we will explore what an alternative mortgage is, how it works, and who can benefit from it.

    What is an alternative mortgage?

    An alternative mortgage, also known as a B mortgage, is a type of mortgage offered by financial institutions that fall between prime lenders (major banks) and subprime lenders. Alternative lenders offer more flexibility and open-mindedness when assessing borrowers’ applications, making them a viable option for individuals who have been turned down by traditional lenders due to factors such as high debt or poor credit.

    What are the benefits of an alternative mortgage?

    Alternative mortgages are beneficial for those who have been turned down by traditional lenders. These types of loans are more flexible and open-minded in their lending criteria, and can help borrowers with high debt, poor credit, self-employed individuals, limited paperwork, and those with rental properties. Alternative lenders are usually smaller banks, credit unions, and specialized B lenders.

    Potential Drawbacks Of Alternative Mortgages

    While alternative mortgages can be a good option for some, they do come with higher interest rates and a one-time fee. However, the interest rates are often competitive with traditional lenders, and the one-time fee is typically around 1% of the loan amount. Borrowers should carefully consider these additional costs before deciding if an alternative mortgage is right for them.

    Real-life examples

    To illustrate how an alternative mortgage can be helpful, we can look at a recent client who was turned down for refinancing by his own bank, TD. This client had high debt and poor credit, making him a risky borrower in the eyes of traditional lenders. However, by working with an alternative lender, the client was able to secure a mortgage with a competitive interest rate and a one-time fee. Although he paid a fee upfront, the savings on his mortgage payments will more than make up for it, and he is working to improve his credit score in the process.


    If you are considering a mortgage but have concerns about your credit, debt, or paperwork, an alternative mortgage may be a good option. By working with a mortgage professional, you can explore the different lending options available to you and find the one that best suits your needs. Remember, it is important to carefully consider the additional costs associated with an alternative mortgage before making your decision.

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