Where lenders beyond the banks fit
A bank says no for a short list of reasons. The first is credit: late payments, a collection, a consumer proposal (a legal arrangement to repay part of your debts) or a bankruptcy on the credit report. The others are income that does not show on a tax return, a property the bank will not lend on, or a completion date that cannot wait for the bank's process. None of those is the end of the road.
Beyond the big banks there are credit unions and alternative lenders who read the whole picture, for people whose income or credit does not fit a bank's template, and private lenders: individuals and funds who lend their own money against the property for a short term. They charge for the risk they take: a higher rate, usually a fee, a shorter term, and more equity, the share of the property you own outright, or a larger down payment.
Used well, they are a bridge: a year or two to fix the thing the bank objected to, then back. Used badly, they are a trap, and the difference is the plan. Sometimes the honest advice is to wait six months and fix two things first, and we say that too.
What private lending costs, in writing
Every one of these is in the commitment letter, the lender's written offer that becomes the contract when you sign it, and in a one-page summary from us before you sign.
| Cost | What it is | When you see it |
|---|---|---|
| Interest | Higher than a bank's, and usually interest-only, so the balance does not fall while you are there. | In the commitment letter, before you sign |
| Lender fee | A fee the lender charges for setting up the mortgage, usually taken off the money advanced. | In the commitment letter |
| Broker fee | May apply on private and some complex mortgages, because the lender does not pay the brokerage. Disclosed in writing before you commit to anything. | In our fee disclosure, before any commitment |
| Legal fees | Your lawyer, and often the lender's lawyer as well. | Estimated up front, then on the lawyer's statement at completion |
| Appraisal | The lender's valuation of the property, which it relies on more than a bank would. | Before approval; you pay the appraiser directly |
| Renewal fee | If you stay past the term, the lender may charge again. The exit plan is how you avoid it. | In the commitment letter |
BC rules require the cost of borrowing to be disclosed to you before you are bound. We put it on one page in plain words, and nothing is signed until you have read it.
The exit plan, always
A private or alternative mortgage is arranged with the way out written down at the start: what has to be true at renewal for a bank to say yes. A credit score back above the line and twelve months without a missed payment. The tax returns filed and the balance paid. The consumer proposal completed. The renovation finished and the property rentable. The job past its probation.
Those become a short list with dates, and we check it with you at six months and again at four, on the same renewal clock every residential client gets. Interest-only payments mean the balance is the same at the end as at the start, so the exit is not a nicety; it is the whole point of the arrangement.
Moving back to a bank lender
Usually one term, sometimes two; the list is short and the dates are yours.
- 1
Find out exactly why
One credit report, pulled with your written consent, and a plain conversation about what the bank objected to. Often it is one thing, not five.
- 2
Place the mortgage
With the lender whose rules fit, for the shortest term that gives you enough time, with every cost in writing first.
- 3
Fix the cause
Pay the collection, keep two cards under a third of their limits and never late, get the returns filed, finish the proposal, finish the renovation.
- 4
Check at six months
Is the list on track? If a bank would already say yes, we go early.
- 5
Apply to a bank before maturity
Four months out, the same application goes to a bank lender with the new credit report and the new returns.
- 6
Switch at maturity
The bank pays out the private lender on the maturity date, with no penalty for leaving on time.
Will you check my credit on the first call?
No, there is no credit check at the enquiry stage. A report is pulled only with your written consent, once, and you see it before any lender does.
Does a consumer proposal end my chances?
Not permanently. While it is open, some lenders beyond the banks will consider you with enough equity or down payment. Once it is paid and reported as completed, the road back to a bank begins.
And a bankruptcy?
Lenders look at how long it has been since the discharge, the date the bankruptcy formally ended, and what credit you have rebuilt since. Nobody can promise an outcome, but there are lenders who will look, and a plan that gets you to the ones who will not yet.
Is a private mortgage a last resort?
It is a tool with a cost and a time limit. We use it when it is the right tool, when the bridge is short and the exit is real, and we say plainly when it is not.
Does Lendrite lend the money?
No, Lendrite is a brokerage licensed by the BC Financial Services Authority. We arrange the mortgage with a lender, and the lender's commitment letter is what you sign.
No application goes to any lender without your say-so, and you see every cost in writing before you commit. Bring your latest mortgage statement, the bank's letter if you have one, and anything you know about the credit report. Book a 20-minute call →