Where once an alternative institutional lender could do 75-80% (LTV), they are now more commonly doing 65%. That means many are now turning to private lenders to top up those mortgages.
“It’s a way to get clients to 80% loan-to-value,” says a broker specializing in alternative deals, Adam Hale
of The Mortgage Centre. He pointing to the re-emergence of those bundled deals, usually involving the private lender coming in behind the alternative player with a second mortgage.
As alternative lenders are becoming stricter in their underwriting, it has become much more difficult to qualify clients. Tight B-20 and B-21 guidelines have also nurtured the partnership between alternative and private lenders.
The latter are especially prized in the white-hot West Coast market, says Tiffany Pedersen, assistant vice president for Capital West, suggesting brokers and alternative institutionals have taken it upon themselves to better educate clients on the value of private lending, and the flexibility that it offers.
“Brokers and private lenders come together to educate customers, in general, that there are options outside of traditional lenders,” says Pedersen.
The flexibility and nimbleness of private lending is attracting brokers but also alternative lenders looking to bundle loans.