Mortgage Lenders in Canada

Canadian mortgage industry has dozens of lenders from which the customer may choose. It is very important to find the right lender based on different products and services they offer. Lenders can be divided in the following categories based on the type of business they specialize in. Its either prime mortgage lending or sub-prime mortgage lending.

Prime Mortgage Lending

Prime mortgage lending is defined as lending to clients who are considered to be prime borrowers. A prime borrower is typically an individual who has excellent credit rating, easy to prove income and stable employment. Basically, it's the clients who are in a good financial shape and can count on the lowest interest rates. This type of lending is often referred to as "A lending" or "Prime lending".

The majority of Canadian public will fall into this category, as shown by the amount of mortgage transactions performed by prime lenders. Typical prime lenders include those who deal directly with the public, such as Banks, Credit Unions, Trust companies.

Sub-Prime Mortgage Lending

The sub-prime mortgage market has developed in Canada over the past several years in response to Canadians with specific financial mortgage needs who were not and are not services by prime lenders. Some prime lenders do offer some sort of sub-prime products, for people not qualifying for prime lending guidelines. Alt-A borrowers (sub-prime) is often people whose credit might be good, but not excellent and who might not be able to prove his income, but still be considered low risk by the prime lenders.

The increase in the sub-prime mortgage market offers borrowers the option to obtain financing to buy or refinance a house when they usually would be declined by the prime lenders under normal circumstances. By offering new financial products the sub prime lenders have increased the number of potential home buyers, which is definitely a good thing, as more people are able to afford to buy houses.

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