Importance of the Exit Strategy: Formulating a Plan for Refinancing

May 23, 2020

The day-to-day life at a mortgage brokerage can be fast paced at the best of times. Once a last-minute purchase or urgent refinance is added to that mix, the pace can threaten to become hectic.

Oftentimes, it is tempting in these situations to close that last-minute mortgage without fully mapping out the next step. However, in the long run, flying by the seat of your pants is doing yourself a disservice.

Having a clear exit strategy can be a huge advantage for brokers, clients, and lenders alike.


Brokers

The clearest benefit in formulating an exit strategy is garnering repeat business. Once the initial scramble is over, having a step-by-step plan for borrowers to follow will likely result in getting their file again when their initial mortgage is up for renewal.

Whether their challenge is bruised credit, thin credit, unusual income, or otherwise, a personalized plan to address the issue is ideal for connecting with clients. It also builds trust in the broker-client relationship, ensuring that they will return again and again.

Mentioning that an exit strategy has been discussed with clients shows potential lenders that the application process has been thorough. This may lead to less questions during underwriting, resulting in a faster turnaround time for everyone.


Borrowers

An attractive interest rate is something most borrowers are seeking. If a short-term mortgage with a higher interest rate is called for, showing the borrowers how to move smoothly from that mortgage to one with a lower interest rate will result in real and obvious benefits for them in the future.

Discovering credit problems, especially at the last minute, can be both frightening and frustrating for clients. A plan outlining how to resolve the issues standing between borrowers and the best possible rate can lead to a smoother mortgage process both now and in the future.


Lenders

Knowing that a broker has discussed an exit strategy with a borrower can make the underwriting process more efficient. Including this information in notes can mean that less questions arise, and it may even give the underwriter more confidence in the file. Thorough notes with details of an exit strategy may lead to less back and forth, reducing that stressful waiting period between submission and file complete.


Writing the exit strategy down and providing a copy to the client while keeping a copy on file is key.
Checking in periodically to see if progress is being made is helpful in creating a win/win situation for everyone involved.

 

Register for Magenta’s back-end portal to access useful tools and forms today!

 


About Magenta Capital Corporation

Magenta is one of Canada’s leading residential, private MICs. Since 1994, we’ve specialized in flexible mortgage solutions for Ontarians who fall just outside of bank lending criteria, while delivering on strong, consistent returns for shareholders across Canada. Our goal is to empower our customers, partners and employees to build a better tomorrow.
For more information, call us at 888-267-1744 or visit www.magentacapital.ca.