Financing Alternatives to the Banks

Financing Alternatives to the Banks

Written by Caitlin Wood
Last Updated June 2, 2021

The traditional approach to obtaining a loan, a mortgage or refinancing your home is to go to a bank. But what other options are available to you? Could you actually save money by not going to a bank? The answer is yes.

Save with a Mortgage Broker

There are many alternatives to banks including private lenders, credit unions, co-ops and other lending institutions. Dealing with them at an individual level might prove difficult, therefore we strongly recommend you seek the assistance of a mortgage broker.

The easiest way to find a financing source that’s cheaper than a bank is to see a mortgage broker. Brokers know the market and know about the different financial products available to you. Mortgage brokers work for you, the borrower, and as such aim to find you the best possible rate for your loan. They do the shopping for you too, so it’s a great way to save both money and time.

Solutions for individuals with bad credit

If you are suffering from bad credit, don’t worry! It’s quite easy for you to find a loan, even without the banks.

Renting to Own

If you have a bad credit score and do not qualify for traditional loans, renting to own is a great way to start working towards ownership of the home of your dreams. Renting to own is renting with the option to buy: you are basically given the option to purchase the home you want within a specified period of time.

Some of the benefits of renting to own include using a lower down payment, building equity, avoiding closing costs and repairing your credit score.

Read more about the rent to own home ownership program.

Private Lending

Another great source of financing for individuals with credit trouble are private lenders. Private lenders aren’t as interested in your income or credit score as the banks are and their lack of compliance standards and regulations mean that they can close a file in just days, usually in under 48 hours.

Seller Financing

Another option to a mortgage from a bank is seller financing. In this situation the buyer actually owns the property while the seller takes on the role of the lender. The buyer pays mortgage payments to the seller (this is not rent, they are real mortgage payments). The buyer benefits first and foremost by purchasing a home, but also by building credit. In case of default, the seller is protected by holding the note on the property. The seller can lend to anybody: bad credit, self employed, bankruptcy – you name it!


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Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

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