The Exit Strategy
Something that most brokers don’t think about when taking on a client that needs a loan from a private lender. We always make sure clients have an actual plan on how funds will be used and there is a plan in place that will allow them to move from the private lender to another lender (bank, credit union, A or AltA lender). In case they do not, We help them, listen to them and work with them to have a solid exit strategy. This is a tremendous advantage – both in terms of encouraging private lenders to provide clients with a loan and in terms of future mortgage loan needs.
Creating an exit strategy means having a frank discussion with clients about creating an actual plan about mortgage needs over a 1-5 year period, that would typically involve:
- Working with the client to either improve their credit over a period of time so that they can qualify for a different type of mortgage OR
- providing your clients with time to be able to sell their property at the end of the term of the private mortgage loan.
That might mean using lenders to obtain a 1st mortgage to purchase a property or to refinance an existing mortgage or it could be placing a second mortgage to consolidate debt or home improvements that can be used to help improve their financial situation or improve the value of their home.
Having an exit strategy is a sound business decision and We share that exit strategy with Our private lenders, give them a comfort level that a plan is in place to move beyond the term of the private loan.