A borrower, Emily Chen, a self-employed graphic designer in Vancouver, is seeking a $600,000 mortgage to purchase a new primary residence. Her declared income is irregular, making it difficult to qualify with A-lenders. A broker, David Lee, suggests a B-lender product. Which of the following is most likely a characteristic of this B-lender mortgage?

Question: A borrower, Emily Chen, a self-employed graphic designer in Vancouver, is seeking a $600,000 mortgage to purchase a new primary residence. Her declared income is irregular, making it difficult to qualify with A-lenders. A broker, David Lee, suggests a B-lender product. Which of the following is most likely a characteristic of this B-lender mortgage?

Answer options: ✅ Higher interest rates and potentially higher fees compared to A-lenders, but more flexible income qualification.

• Strict adherence to OSFI Guideline B-20 stress test, similar to A-lenders, for qualification.
• Access to CMHC default insurance due to their regulated status.
• A 30-year amortization period is standard, without any impact on qualifying rates.

Correct answer: Higher interest rates and potentially higher fees compared to A-lenders, but more flexible income qualification.

Explanation: B-lenders typically offer more flexible underwriting for non-traditional income earners but compensate for the increased risk with higher interest rates and fees. They are not always subject to OSFI Guideline B-20 in the same way as federally regulated institutions, and their products are generally not CMHC insurable.