B Mortgages

A B mortgage is an alternative to traditional bank financing for borrowers who may not meet the income or credit requirements of conventional lenders.

B lenders can be particularly helpful for business owners and self-employed borrowers. They understand that a tax return may not always tell the full story about someone’s financial situation or their ability to support a mortgage. Depending on the lender, other information such as business financial statements, bank statements and overall cash flow may be considered.

B lenders may also be more flexible when it comes to credit. A lower credit score, a past credit problem or an isolated event does not necessarily prevent someone from qualifying.

Rates for B mortgages vary depending on the strength of the application. Factors such as the amount of your down payment or equity, your credit history, the type of property and how well you can demonstrate your income can all affect the rate you are offered.

In stronger applications, B mortgage rates can be surprisingly competitive, although they are generally higher than rates available from traditional banks. B lenders typically charge a 1% lender fee in addition to the interest rate.

Because rates and lending programs change regularly, the best way to find out what is available is to give me a call. I can review your situation and give you an idea of the rates and terms you may qualify for.

In addition to the interest rate, a B mortgage will typically have a lender fee. A common lender fee is approximately 1% of the mortgage amount, although this can vary depending on the lender and the circumstances of the application.

The lender fee can often be added to the mortgage, so you may not have to pay it out of pocket at closing. It is generally a one-time fee when the mortgage is arranged.

Some B lenders also charge a renewal fee if you decide to renew the mortgage at the end of the term. This is typically in the range of $250 to $500, although it varies by lender.

As with a traditional mortgage, you are also responsible for your own legal costs.

B mortgages are commonly used to purchase a property when the borrower doesn’t quite meet the qualification requirements of a traditional bank. This may be because of how the bank calculates your income, your credit history, or because you already own several properties.

B mortgages can also be used to refinance a property. In a refinance, the funds can generally be used for a variety of purposes, such as consolidating debt, accessing money for your business, renovations, investments or other major expenses.

One- to two-year terms are often a good fit for a B mortgage. They can provide enough time to improve your financial situation while avoiding the commitment and potential payout penalties of a longer-term mortgage.

Ideally, a B mortgage should come with an exit strategy. The goal may be to improve your credit, establish a stronger income history, reduce your debt or make other changes that will allow you to move to a traditional lender when the B mortgage comes up for renewal.

For business owners and self-employed borrowers, it is also important to look at the total cost of the available options rather than simply comparing interest rates. In some situations, the costs associated with obtaining conventional financing may make a B mortgage worth considering as a temporary solution.

The objective is not necessarily to stay with a B lender indefinitely. It is to use the B mortgage as a bridge until you are in a position to qualify for more traditional financing.

The next step is simple. Give me a call or send me a note. A brief conversation about your situation can help determine whether a B mortgage may be an appropriate solution for you and what options are available.

Not sure whether a B mortgage could work for you? Read a real-life case study [here] to see how a B lender helped a business owner purchase a home after traditional bank financing wasn’t available.