The US financial crisis has given the term “Subprime” a bad name. The truth of the matter is that this is an institutional loan for those who don’t qualify for the bank’s best mortgage products. This covers everyone from self employed business owners who don’t desire to disclose all of their intimate details – to your neighbor (or maybe yourself) who is an average Canadian but has fallen on hard times. Let’s see how this mortgage can help you in turning the corner and getting back into the bank’s good books.
What is “Subprime”?
Like I said – the picture that came to your head of welfare recipients signing loans that were in default effective immediately just isn’t the case here in Canada. The subprime mortgage market is a viable alternative solution for many of the challenges Canadian mortgage holders face. From an industry perspective – the fact that we have the choice of going to a federally regulated financial institution with bruised credit is a blessing. Many countries do not have this many options – it’s either bank A,B,C or the street. As a subprime mortgage holder – you can know that you have a good shot at improving your financial position and move back into the bank’s good books with a little time and a great plan.
How Is This Different From A Bank Mortgage?
The major difference between a subprime mortgage and a prime bank mortgage is in the way the lender looks at you as an applicant. The process of applying for a prime mortgage is a quick check of your credit score – employment verification – and in some cases a verification of your property’s value. Subprime goes further in looking at all the details:
1) Credit History: A thorough account of the history of your payments and any delinquencies. The reason this is done is not to punish you but to give us the opportunity to explain what happened and incorporate a corrective plan of action as part of the new loan.
2) Employment Verification: Many of us make money from non traditional sources or less traceable ones (ie. cash). Self employed business owners work hard to write down legitimate tax write offs which make their provable income harder to determine. Subprime mortgages go further to get an explanation and make the case for your income toward mortgage qualification.
3) Property Type: Not all of us are interested in purchasing cookie cutter subdivision homes that are easy to find the market value. The location and condition of the home can also be a hindrance to getting you the financing you need. Subprime mortgage lenders go further to determine the market conditions affecting resale and will look at unique and non conforming properties on a case by case basis.
Keeping Perspective Is Key
The reality at the end of the day is that more lending options is always better for the consumer. History has taught that every developed nation that has a plethora of lending options has a direct correlation to a greater standard of living for all. The subprime mortgage market is one that enables those who have fallen between the cracks of the new mortgage rules to get a second chance. Working with a credible mortgage professional will ensure that you will get the best offer possible for your situation and more importantly – that a plan is put in place to make sure you don’t stay in your present predicament.
When you are ready to learn more about the options available to you, contact me below and I will answer your questions promptly and to the best industry knowledge and what my depth of experience will provide. Cheers