Are you worried about being turned down for a mortgage or not being able to renew with your existing lender? If so, you’re not alone. Mortgage qualification is more difficult right now due to higher interest rates and lower property values. Fortunately, mortgage agents have access to lenders outside of the traditional financial institution options.

An alternative mortgage – also commonly referred to as non-traditional or unconventional – is exactly that: an alternativeto a conventional (or traditional) mortgage. If you don’t meet traditional lending criteria, an alternative mortgage lender may offer you a second chance at qualifying for your home loan. 

Common reasons that borrowers require alternative lending options include: Not being able to pass the required mortgage qualification stress test; Low credit score; Non-traditional income (eg, self-employed or part-time worker); Lack of established/blemished credit; or Insufficient employment history to demonstrate steady income (often due to job loss or changing jobs). 

What’s an alternative mortgage lender?

Alternative mortgages are offered through alternative mortgage lenders – everything from B mortgage lenders to private lenders and mortgage investment corporations (MICs), who often provide the same products as traditional, or A mortgage lenders. There are some differences, however, particularly when it comes to qualifying criteria that tend to be less strict when using unconventional mortgage lenders. For instance, these lenders will still look at your credit history but your credit score doesn’t have to be as high as required with a traditional lender. 

An alternative mortgage also carries shorter loan terms (typically one to two years) and, while interest rates are higher, they offer greater flexibility. Your mortgage agent will work with you to plan an exit strategy with the idea of returning to traditional lending at lower rates within a specified period of time.

Have questions about your best mortgage options? Answers are a call or email away!