Mortgage brokers get to participate in one of the most exciting moments of many peoples’ lives by working with them to buy property. Whether a young adult buying their first home, getting a growing family into a larger space, or helping to make a couple’s dream of a vacation property a reality, mortgage brokers play a role in making things happen!
There are also times however where they have to be the bearer of bad news. Many borrowers with high aspirations have their hopes dashed when their bank rejects their mortgage application. Although there can be many reasons why the bank may not approve a mortgage for your client, you can provide support for their ambitions by presenting them with other possible borrowing options.
Private lenders like CMI offer financing to clients that get turned away from conventional lenders because they are not restricted by the same conservative lending guidelines. Even though a client may not qualify with the bank, private lenders understand that there is more to a borrower than just their credit score, and will consider additional factors that go beyond the banks’ rigid lending criteria. In fact, there are several situations where the bank frequently says no and CMI can say yes. A few of these scenarios are discussed below.
Clients with credit issues
To qualify for the best mortgage rates from traditional lenders, borrowers generally need a beacon score of 680 or above. If your client has a score below this threshold, that could be the only reason a bank needs to deny their mortgage. Private lenders are more interested in the story behind the numbers and can provide fast, flexible solutions based on the strength of a client’s overall circumstances and not just their score. CMI can also offer financing used as a debt consolidation tool, to help improve a client’s credit score so they may eventually qualify for a conventional mortgage.
Clients need short-term or fast financing
Clients often need fast, temporary financing. When a borrower wants to purchase a new home before their current home sells, they may want to use their home equity to come up with the funds needed to close on their new purchase. In cases like these, clients don’t always have time to go through a traditional lender’s longer approval process.
CMI can generally approve financing in as little as a few hours.
Clients that changed jobs or have insufficient income
Traditional banks and larger lenders look very closely at employment history and income when assessing a mortgage application. If your client has recently experienced job loss, moves frequently between jobs, or even if they are self-employed, it may appear risky to conventional lenders.
Many modern forms of employment are considered non-traditional, and fall outside of B20 (lending) regulations. Private lenders like CMI understand that many borrowers who have untraditional income or job histories are still capable of repaying their mortgage. Private lenders are more flexible with these types of clients because they consider more variables (such as debt-to-income ratio) and require less documentation.
Clients purchasing an unconventional property
Sometimes the location, condition, or the type of property your client is looking to purchase may affect whether a conventional lender is willing to approve their mortgage application. These lenders want to ensure that they are lending on a property that is marketable, should the borrower default.
Private lenders are able to take on more risk generally in exchange for a higher rate – but that doesn’t automatically mean rates are going to be significantly higher than the traditional space.
CMI takes a more practical approach. All deals are priced on a case-by-case basis according to a number of factors, including the property type and location, the loan-to-value percentage, the security position, as well as the client’s credit worthiness and their ability to make payments.
CMI helps get more borrowers financing
There are several other reasons why conventional lenders may decline your client’s mortgage application, but they don’t have to give up on their dream of owning a home or vacation property.
Before you tell your client the bank said ‘no,’ talk to CMI about potential private lending options – and avoid being the bearer of bad news.
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