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Alternative mortgage

An alternative mortgage is any mortgage that is not a traditional, fixed-rate mortgage, like an adjustable-rate mortgage or an interest-only mortgage. These mortgages are a recent banking innovation, but riskier than traditional mortgages.

An alternative mortgage instrument (AMI) is any residential mortgage loan that is offered by non-standard lenders (non-banks) and deviates from standard mortgage practices. For instance, it may be a mortgage that is not fixed-rate, fully amortizing, has monthly or periodic payments, or a standard term of repayment. 

Sometimes, an AMI is a loan with real property as collateral, with the money being used for some other purpose than purchasing the property

Extra reading:

https://www.investopedia.com/terms/a/alternative_mtg_instrument.asp

https://www.insiderintelligence.com/insights/alternative-nonbank-mortgage-lending/

https://www.nesto.ca/mortgage-basics/what-are-alternative-mortgage-lenders/

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Read our guide to understand what is underwriting in real estate, the key metrics and steps of the process, what to expect, how to become an underwriter yourself and more.

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