With greater choice than ever, there are a number of factors for brokers to take into consideration
This article was produced in partnership with Neighbourhood Holdings
Fergal McAlinden of Canadian Mortgage Professional spoke with Jared Stanley of Neighbourhood Holdings to get an insight into some of the main things for brokers to look for in an alternative lender
As the rise of alternative lending continues, and a growing number of mortgage brokers start to become involved with the space, it can often seem a daunting prospect to choose from the array of lenders available to brokers and borrowers.
There are a number of factors that every mortgage broker should take into consideration when choosing their alternative lender, according to Neighbourhood Holdings senior director of originations Jared Stanley (pictured top) – not least the nature of the relationship between broker and lender.
That means trust and mutual investment in each other’s business, Stanley told Canadian Mortgage Professional, and a clear understanding of whether lenders view brokers as a true partner or merely a transaction.
“You really want to figure out what you are to that person and what they’re willing to invest – and I’m not referring to money,” he said. “I’m referring to the most valuable commodity, time. Long-term relationships are built on that mutual investment, and transactional relationships are short-term.
“When you’re choosing your alt-lender, ask whether they’re trying to build a long-term partnership, because there are going to be ups and downs and changes in the market. There are going to be hard deals and easy deals, and you really want someone to be by your side to help you get through those deals.”
Of course, the influx of new entrants to the alt-lending space in recent times also means that it’s never been more important for lenders to have a track record and solid reputation, something that Stanley said is “imperative” in order for brokers to protect their clients, brokerage, business and brand.
“We work with some of Canada’s top brokers, and they all do a ton of repeat and referral business,” he explained. “Clients need to be happy before and after funding to generate that type of business. Alternative lenders with track records and good reputations help that.”
Transparency and accountability are also crucial components of a broker’s choice, Stanley said, with Neighbourhood Holdings generating plenty of repeat business because the terms are clear and there are no surprises down the line from the borrower’s point of view.
“Borrowers are often happy to come back to us because they know that whenever they did their first investment purchase, we did what we said we were going to do at the time,” he said.
Central to Neighbourhood’s approach is its focus on cultivating meaningful, lasting relationships with broker partners, which it achieves partly through the highly collaborative and unified approach of its team.
That’s an ethos that spills over to the company’s partners – and if it’s clear that a deal can’t be done, it’s always happy to point brokers in the right direction, Stanley said.
“Our team has a real sense of joy when we can help,” he said. “This ties back to our company policy about going the extra mile. If we can’t do the deal, our team will try and point you in the right direction. That way, at the very least, we can be a small part of the solution.
“We can’t do every single deal – it’s just how it works. But we always love having conversations with brokers and putting them on the right track.”
In addition to those factors, there are also some red flags that brokers should be looking to avoid in their choice of alternative lender, Stanley said. One of the main questions to ask is whether the lender is playing with their cards up or down; the former means allowing brokers to understand the levers that affect pricing and conditions, while latter means that brokers might have to waste valuable time and energy arguing with the lender over pricing.
“Brokers can have a really tough time setting expectations with customers. It’s exhausting, and I applaud them for it,” he said. “Brokers help customers with their finances, but I feel like they’re sometimes part counsellor too. They spend a lot of energy helping their clients and I don’t believe that they should waste any of that haggling with their lender.”
With Neighbourhood’s price sheet, brokers can immediately say exactly what they can and can’t get done, Stanley said – helping set them apart from other brokers using different companies who might continually have to tell clients they’ll get back to them about the issue.
Ultimately, asking hard questions is one of the best things that brokers can do before deciding to go with a specific alt-lender, according to Stanley. It’s important that those include the negative points as well as the good, much in the same way that an Amazon shopper might read the bad reviews before the positive ones when deciding to make a purchase.
When speaking with a BDM at a lender, then, Stanley recommended asking searching questions: What do brokers not like about the product? Has the lender ever had upset customers and if so, what were they upset about? What is the company weak at? Those queries will allow brokers to get a more rounded view of the company and its shortcomings as well as its strengths.
Finally, brokers shouldn’t be afraid to be frank and honest about the fact that they might not fully comprehend something about a specific deal, Stanley advised.
“Be vulnerable. Let your lender know if you don’t understand something on a deal or if you have a concern,” he said. “As lenders, we’re experts on our products – and we’re here to help you.”
Jared Stanley is senior director of originations at Neighbourhood Holdings, a lender across Canada’s alternative space with headquarters in Vancouver, British Columbia.
