For new mortgage brokers, one of the most important lessons to learn is that getting a client approved is not simply about finding the lender with the lowest advertised rate. Your real value is your ability to understand a client’s circumstances, recognize where a deal can be placed and find a solution when the obvious lending options do not work. Maybe the client’s credit has deteriorated, they are self-employed and their reported income does not tell the full story, or they have been declined by another lender late in the process. Whatever the circumstances, your client is not particularly interested in hearing that their deal is difficult. They came to a mortgage broker because they expect you to understand the lending market and help them find a solution.
Having dependable lending partners behind you can make the difference between turning a difficult file into a closed mortgage and losing the client altogether. That is why building a strong lender network should be a priority for a new broker, not something you start doing only after you encounter a deal you cannot place.
Your lender network is part of the service you sell
Clients sometimes think a mortgage broker’s primary job is to find the lowest mortgage rate, but experienced brokers know the job is much broader. You are navigating lender policies, underwriting requirements, property considerations, borrower circumstances and closing deadlines. You need to understand which lender is likely to consider a particular file before spending days trying to force the borrower into criteria they simply cannot satisfy.
A client can approach a bank themselves. One of the reasons they come to a broker is because they expect access to more options and someone who understands how to navigate those options. Your knowledge of the lending market, including alternative and private lenders, therefore becomes part of the value you provide. The stronger your lender relationships become, the better equipped you are to deal with clients whose circumstances fall outside conventional lending guidelines.
Not every good client is a conventional mortgage client
A bank decline does not necessarily mean there is no mortgage deal to be done. A borrower can own a valuable property and have substantial equity while still failing conventional underwriting requirements. A self-employed homeowner, for example, may have difficulty demonstrating income in the format a traditional lender requires. Another client may earn sufficient income today but have damaged credit following a divorce, business setback, job loss or other difficult financial period.
There are also more complicated situations involving bankruptcy or power of sale. These borrowers may not satisfy conventional lending requirements, but the property and available equity can create other financing possibilities. Private lending allows the file to be evaluated differently, with greater emphasis placed on the property and available equity. For a broker, understanding that distinction gives you another path to explore instead of simply telling a client that their application has been declined.
Lender instability can quickly become the broker’s problem
Mortgage lending guidelines do not remain static. Lenders change programs, adjust their risk tolerance and tighten underwriting criteria as market conditions change. A type of transaction that was relatively easy to place several months ago may suddenly become much more difficult.
The problem for the broker is that the borrower does not necessarily understand what has changed behind the scenes. They know they provided the information requested, expected their financing to proceed and now have a problem that needs to be solved. If a lender changes direction or a deal falls apart late in the process, the broker is often left managing the client’s expectations while urgently trying to find another option.
This is why a lending relationship needs to be about more than rates and commissions. You need lenders who will respond, make decisions and tell you quickly whether they can work with a file. Having a reliable private lender in your network gives you somewhere to turn when another financing option disappears, particularly when you do not have the luxury of starting the process again and waiting several weeks for another decision.
Speed and simplicity help you deliver a better client experience
Mortgage transactions often become more urgent as they approach closing. If a problem develops late in the process, waiting several days just to find out whether another lender might consider the file can put both the transaction and your client relationship at risk. A quick decision gives you something extremely valuable as a broker: certainty. If the deal works, you can move forward. If it does not, you know quickly enough to continue looking for another solution.
At Prudent Financial, qualifying private mortgage applications can receive same-day approvals, with closings possible in as little as three days when the necessary closing requirements are satisfied. Prudent also does not require an appraisal for qualifying private mortgage applications. This removes another potential delay from the process and means the broker does not have to ask a client who may already be under financial pressure to pay for an appraisal simply to determine whether the deal can proceed.
Every additional document, condition and upfront expense creates friction with the borrower. When you are trying to rescue a difficult file, a simpler lending process can make the experience considerably easier for both you and your client.
Learn what makes a good private mortgage file
Building a strong private lender relationship does not mean sending every file that has been declined somewhere else. Good brokers learn their lending partners’ criteria so they can identify a potentially workable deal before submitting it.
Prudent focuses on private mortgage financing for qualifying properties in Toronto and the GTA, with financing available up to 70% loan-to-value. Because the property and available equity are central to the decision, there may be opportunities to consider borrowers with bad credit, bankruptcy, unconventional income and power-of-sale situations that are difficult to place through conventional channels. Traditional income verification is not required.
Knowing these parameters helps you look at a difficult file differently. Instead of simply asking whether anyone will take the deal, you can look at the property’s value, the existing mortgage balance, the amount the client needs and the resulting LTV. You begin identifying potential solutions before approaching the lender, which makes you more effective at structuring and placing private deals.
The difficult client today could be your best client tomorrow
Generating a mortgage lead takes work. Whether the client came through a referral, your personal network, advertising, social media or another marketing channel, you invested time and resources into creating that relationship. Losing the client simply because they cannot qualify for conventional financing today can mean losing the future business associated with that relationship as well.
Private financing can sometimes provide the bridge a client needs. A homeowner may use a private mortgage to consolidate expensive debts, stabilize cash flow and begin repairing their credit. Once their financial situation improves, they may be able to return to conventional financing. When the time comes to refinance, the broker who helped them through the difficult period is in a very strong position to earn that business.
There is also the reputational value of solving a difficult problem. Clients remember the broker who found a way to help when their bank said no. That experience can lead to repeat business and referrals, particularly because the broker has demonstrated something more valuable than the ability to quote a competitive mortgage rate.
Your lending partner should help you look good
Your lender is part of the service experience you deliver, even when the borrower never interacts with the lender directly. When your lending partner responds quickly, communicates clearly and removes unnecessary obstacles, you are able to provide a better experience to your client.
From the client’s perspective, it is their broker who is getting answers, finding another option after a decline and getting a difficult mortgage across the finish line. That is exactly how a strong broker-lender relationship should work. At Prudent, we want our broker partners to shine with their clients, which means recognizing that every file you send us represents a client relationship you worked to build.
For new mortgage brokers, the best time to establish these relationships is before you urgently need them. Learn which properties your private lending partners will consider, understand their maximum LTV, know the borrower circumstances they can work with and find out how quickly they can make a decision. Then, when a difficult file lands on your desk, you already know where to go.
Prudent Financial works with mortgage brokers across Toronto and the GTA on qualifying private mortgage files up to 70% LTV. We can consider bad credit, bankruptcy and power of sale, do not require traditional income verification or an appraisal, and can provide same-day approvals on qualifying applications.
When another lender says no, you do not necessarily have to say no to your client. Send the deal to Prudent and let us help you get it closed.
View Prudent Financial’s broker package to learn more about working with us.