There are three distinct classifications of mortgage loans available in the Ottawa area, that should interest the Consumer. These are: prime residential, non-prime residential, and equity residential.
 

a) Prime Residential

This classification is the target of every Consumer.  This type of lender will allow for a 1/2% to 3/4% discount on their existing posted rates, theoretically because the Consumer shops around and has learned not to accept the posted rate.  The mortgage broker will also shop around to get the best rate for his or her client.  As such, since the Broker has done all the paperwork and credit investigation, the Lender will also pay a commission to the Broker of .25% to .75% of the mortgage amount for this business.
The recipient (mortgagor) of the mortgage money must qualify under strict guidelines.  He/she must demonstrate good job stability, show triple "A" credit history, and prove adequate down payment.  The mortgage may be conventional or high ratio (insured by CMHC or GE Capital).  Competition in this area is fierce.  The chartered banks are bending over backwards to get this class of business.  To date, the Lenders have not advertised their rate discounting policy.  The Mortgage Brokers, including Mortgage Matters Inc., acting as Agents for these lenders, offer an automatic .75% discount, to get their fair share of the business.
 

b) Non-Prime Residential

This area is really non-descript.  We see it as the applicant who has shown some historical or current problem in his/her credit ratings, and/or has not demonstrated adequate job stability, and/or the property is not considered prime.  This client should not expect a rate discount.  The Consumer may be expected to pay a transaction fee to the lender and/or Mortgage Broker for this type of mortgage. It should be noted that in this type of deal the interviewer's capacity to "dig" is all important.  As in our previous segment, this mortgage may be conventional or high ratio.
 

c) Equity Financing

This area of financing has few lenders.  The present sources of money, realizing that there is little competition, have found that their rate and fee structure need not mirror the normal banks'.  Their underwriting guidelines are more flexible.  This type of Client will have either credit blemishes (previous bankruptcy), or have a problem proving adequate income, or a combination of both.  In his/her defence, the applicant will be able to demonstrate either 15% cash equity, or a lesser amount of cash with a "Vendor-Take-Back" second mortgage, to protect the first mortgagee's position.  At the present time, only four lenders fit the bill as "equity lenders" in Ottawa, and only one has local underwriting capabilities.

This applicant will pay a broker fee, and a lender fee.  The broker will  get little by way of commission from the lender, because the lender knows that commission for this type of deal is not normally warranted.  The security (building) offered for the loan is of the utmost importance.  It is understood that the properties financed for this type of applicant shall fit specific guidelines and must be conducive to marketability within a short period of time.  Any default must result in the immediate remedies prescribed under the "Mortgage Act".  A competent lawyer must be on call. Any missed payment shall dictate immediate demand for acceleration of the whole mortgage.

No matter where you fit in, there is mortgage money available for your venture into the housing market.  You needn't fear rejection with the advent of all three types of lending sources in Ottawa.  Service is as close as your telephone.