Alternative Financing Options: Navigating Non-traditional Lending

In an era of rising interest rates, traditional mortgage financing might not always be the most viable or optimal solution for everyone. For those seeking other avenues, the world of alternative financing offers a plethora of options. With Shelto by your side, let’s navigate through the maze of non-traditional lending in Canada.

Step 1: Understanding Why Alternative Financing?

  • 1 The Limitations of Traditional Mortgages: High interest rates might make traditional mortgages less appealing, especially for those with financial challenges.
  • 2 Broader Criteria: Alternative lenders often consider broader criteria than credit scores, making them suitable for those with unconventional income sources or credit issues.

Step 2: Recognize Different Types of Alternative Financing

  • 1 Private Mortgages: Offered by individual investors or companies, they can be short-term solutions, albeit at higher interest rates.
  • 2 Home Equity Lines of Credit (HELOC): Use your home’s equity as collateral to secure a flexible credit line.
  • 3 Peer-to-Peer Lending: Online platforms that connect borrowers with individual lenders.
  • 4 Rent-to-Own: An agreement that allows you to rent a home with an option to buy after a certain period.

Step 3: Assess Your Eligibility

  • 1 Credit Score: Even in alternative lending, your credit score plays a role. Understand where you stand.
  • 2 Income Verification: Be ready with documentation, even if it’s not from traditional employment.
  • 3 Down Payment: Some alternative lenders might require a larger down payment due to the perceived risk.

Step 4: Dive into Private Mortgages

  • 1 Pros: Faster approval processes and less stringent criteria.
  • 2 Cons: Higher interest rates and potential fees.
  • 3 Tip: Always read the terms and understand the duration, as many private mortgages are short-term.

Step 5: Explore the HELOC Route

  • 1 Flexibility: Borrow only what you need, when you need.
  • 2 Interest Rates: Generally lower than credit cards but might be higher than traditional mortgages.
  • 3 Considerations: Avoid using HELOCs for daily expenses; it’s best for larger, one-time expenses.

Step 6: Understanding Peer-to-Peer Lending

  • 1 Digital Advantage: Entirely online, these platforms offer simplicity and speed.
  • 2 Rates & Terms: Vary by platform and your financial profile.
  • 3 Potential Risks: As with all investments, understand the risks involved, especially if borrowing from less established platforms.

Step 7: The Rent-to-Own Option

  • 1 Initial Agreement: Typically involves an option fee, which gives you the right to buy later.
  • 2 Monthly Premium: Part of your monthly rent goes towards a potential down payment.
  • 3 End of Term: Choose to buy, often using the accumulated premium as a down payment, or walk away.

Step 8: Costs Associated with Alternative Financing

  • 1 Interest Rates: Typically, higher than conventional mortgages.
  • 2 Closing Costs: Understand fees, legal costs, and any potential broker fees.
  • 3 Miscellaneous Charges: Late payment fees or early repayment penalties.

Step 9: Collaborate with Experts

  • 1 Mortgage Brokers: Especially those like Shelto, familiar with the alternative lending market in Canada.
  • 2 Legal Counsel: Always consult with legal professionals to understand contracts thoroughly.
  • 3 Financial Advisors: To ensure the chosen route aligns with your financial goals.

Step 10: Making the Final Decision

  • 1 Compare All Options: Use Shelta’s calculators to compare potential costs, interests, and long-term impacts.
  • 2 Future Planning: Think about your long-term goals. For instance, will the alternative loan be a bridge to a traditional mortgage later?
  • 3 Risk Assessment: All financial decisions come with risks. Evaluate them, considering both present circumstances and future contingencies.


In a high-interest world, traditional mortgage avenues might seem challenging. However, with the right guidance and thorough research, alternative financing can offer feasible solutions. Whether you choose a private mortgage, HELOC, peer-to-peer lending, or rent-to-own, always approach the decision with due diligence and lean on trusted partners like Shelto for expert advice. Remember, finance is not just about money; it’s a tool to craft the lifestyle and future you desire.

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