Panelists at a Toronto event say the profile of alternative-lending clients has shifted from credit-challenged borrowers to self-employed, asset-rich Canadians who view alternative lenders as a long-term solution.
Brokers should package files to reflect business cash flow and document sources of down payments to meet alt-lender underwriting.
Ask lenders directly how they calculate income and which documentation they accept—this changes which clients qualify for prime banks.
# What changed in alternative lending Alternative lenders and brokers discussed a shift in who uses alternative mortgages. Once seen largely as a temporary option for borrowers with bad credit, alternative lending now serves many self-employed people, investors with multiple properties, seasonal property owners and clients with significant net worth.
Panelists at a Toronto industry event said the average alt-borrower profile has widened and that many borrowers treat alt lenders as their ongoing lender rather than a stopgap on the way to a big bank.
# Who the modern alt borrower is Panelists named these common borrower types:
Grant Armstrong of WealthONE said bruised credit makes up a much smaller share of business than 15–20 years ago and that WealthONE's portfolio has an average credit score of 763. Joe Cote of Haventree noted the alt-lender client mix now spans both risk cases and asset-rich borrowers who fall outside the banks' "credit box."
# Why borrowers stay with alt lenders Panelists gave practical reasons borrowers remain with alt lenders:
# What brokers should do differently Panelists urged brokers to stop treating alt lending as a fallback and to treat it as a viable primary solution when appropriate.
# Practical underwriting points When evaluating self-employed borrowers, lenders focus on business-generated cash flow rather than only the owner's personal earnings. They accept either bank statements or business financials depending on the lender. That makes it crucial for brokers to collect and present the right documents.
# Bottom line Alternative lending now serves a broader, often asset-rich population. Brokers who learn individual lenders' income calculations, prepare files to show business performance and plan exits will find more opportunities and better outcomes for clients.
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