Winnipeg Mortgage Rates | What will your Mortgage Rate be if you don't fit the bank's criteria?

December 22, 2015 | Posted by: Ron Chan

What is my mortgage rate going to be?' is often the first question many people ask when financing their home. Mortgage rates in Winnipeg are no different than any other city...they are competitive. One overlooked aspect of getting a great mortgage rate is how good is your credit and on some occasions why are you financing your home. Most people don't realize that obtaining the best mortgage rate is usually reserved for top tier low risk clients. Meaning they have a good credit history, they have a good steady job that provides a stable and consistent income, they have a decent down payment or equity in their home. So what is your mortgage rate going to be if you are a client that has a less than stellar lending profile? In the worst case scenario, you will be declined by the bank or credit union. Often times the banks will ask you to have a co-signor to help mitigate their perceived risk.

So what are your options? You can try using a mortgage broker who will have access to another level of mortgage lenders. These mortgage lenders will often provide a mortgage rate to you but at a higher rate. Mortgage rates are no different than any other type of loan...rates high or low will depend on the level of risk. Your mortgage rate will be higher if your lending profile bears a higher level of risk. You may find that even the second tier lenders are not willing to give you a mortgage based on your credit profile. Does this mean you are out of luck? Maybe, maybe not. Many traditional private lenders will provide a mortgage but their rates are substantially higher because they have to account for the probability of mortgage default. Many private lenders will take into consideration the same lending criteria that banks use and where the banks say no...the private lender will say yes but at a higher rate. Most private lenders will charge a rate that will reward them for their risk they are taking so it's not uncommon to see rates as high as 15%. In many cases, 15% is a lot better than the 18-30% most mortgage refinance clients are being charged on their credit cards. So in some cases it makes sense to have a mortgage rate that is 15%.

But are there private mortgage lenders out there willing to charge less for a mortgage rate? For Winnipeggers, there are private mortgage lenders willing to charge less. Having said this, the way that they lend money is a little different. Specifically, how they take security is different from traditional lenders. This is a very important consideration to take. Earlier we discussed how mortgage rates are tied to risk versus return. Private mortgage lenders are no different...they need to be compensated for the risk they are about to take. Some private mortgage lenders will take title to the property they are willing to finance and in return they will offer better than standard private mortgage lender rates. As mentioned before, most private lenders will start at 15% for a mortgage rate. Having said this, if you are prepared to offer up title to the property you are seeking to get financed there are some private lenders who will charge between 8%-13%. 

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