THE SELF-EMPLOYMENT sector in Canada is booming – with a segment of people post-pandemic opting to work for themselves, investing in side hustles, or turning to more diverse streams of income. Research from Statistics Canada released late last year found that there were 2.7 million self-employed individuals in the country – representing a staggering 13.2 percent of the employed population. In the mortgage world, however, the self-employed often face barriers to gaining a loan. Data from The Mortgage Lender (TML) found that two-thirds of those working in the gig economy have had some or all of their mortgage applications declined, with 30 percent of them saying it was due to the “unsteady or irregular” nature of their profession.
Today, as more Canadians turn to self-employment, lenders are having to rethink how to assess these borrowers’ financial profiles in order to help those most in need – or risk falling behind their nimbler competitors. At Haventree Bank, business development directors Brett Lovegrove and Sandy Pandolfi are helping transform lending for the business-for-self (BFS) segment – by combining data, empathy, and technology in equal measure. “We take a different approach when it comes to our self-employed clients,” explained Lovegrove. “Haventree employs a cash-flow approach to adjudication to perform the analysis of their business and get a better understanding of their full business cycle so that we can see the peaks and the valleys.”
Haventree Bank examines actual revenue streams, industry specifics, and business structure. “We want to know what type of business they’re in,” Lovegrove said. “Are they retail? Are they commercial? Do they have employees? Is it a one-person digital marketing company that runs out of their home, or a heating and ventilation company with 20 employees and a storefront? We take the time to understand their business.” After all, not all BFS income is equal – there’s the sole proprietors versus the incorporated owners, consultants versus business owners with staff. At Haventree Bank, working in collaboration with mortgage industry professionals, they go that extra mile to understand the story behind the numbers – something that begins with a human connection.
Tech meets empathy
A core aspect of Haventree Bank’s approach here is a perfectly blended marriage of innovative tech and human expertise – something that resonates with the sector at large. According to the Borrower Insights Survey, 37 percent of millennials think more face-to-face interaction and more communication with their lender would have improved their last mortgage application experience, with a further 37 percent adding that their ideal interaction is a blend of tech and human insight – something that chimes with Lovegrove’s approach. “We’re always looking for digital means to make the process easier. Tools that help underwriters scan through bank statements – some of which could be 20 or 30 pages long. But we always have that human element in there too. We reach out to our self-employed clients because, again, we want to understand their business: What is their cycle? What are their challenges? What are their successes? How can we help them along with that process as well?”
A collaborative broker relationship
A core pillar of Haventree Bank’s model is broker engagement, with Lovegrove adding that one of the best things that brokers can do is involving their BDM from the start. “Their BDM has a wealth of knowledge – they can look at things from an underwriter’s perspective and also from Haventree Bank’s risk perspective. We’ve got incredible underwriters, but we’ve also got an incredible sales te am that are there to help. We want to say yes – we want to help find solutions for clients, especially for our self-employed ones.” And for brokers, this support makes BFS deals all that more viable. “Collect a robust documentation package,” advised Pandolfi. “A detailed submission including Haventree Bank's 'Tell us about your business form' along with application notes helps our underwriters understand the nuances of the business.
“We’re trained to review bank statement patterns, not just standard net income lines. We accept applicants with two or more years in business with a credit score as low as 550... This means borrowers who don't meet conventional A-lender thresholds can still have a home.”
Securing the future with technology and transparency
And, as self-employment grows across Canada – driven by the gig economy, COVID-era shifts, and new digital business models – Haventree Bank’s approach is becoming increasingly relevant. “People are looking at other sources of income – dog walking, daycare, respite care, adult disability care,” explained Lovegrove. “That’s all income in that self-employed stream that we’re able to take into consideration. There’s a lot more flexibility too – with people having moved to remote locations, they have that flexibility of being home and starting their business. That’s where we come in – we really help those clients build their business and help with change of having a confirmable income versus a BFS income.”
Another cornerstone of Haventree Bank’s efficiency is its secure broker portal – because all the deals they handle with their brokers are held securely in the cloud. “The best part about our portal is that for each deal we have a tab for outstanding conditions,” Lovegrove told CMP. “Everything is date and time stamped – it’s all very specific. There’s no guessing what documents they’re going to need – we have it already outlined in our commitment. We also give them updates of where it stands with their documentation – we’re very transparent with where we are in the process.” “Their feedback is incredibly important,” said Pandolfi. “We’re always keeping our brokers in the know… because you always want to make things smoother and easier for the clients.”
Looking ahead: a call for industry evolution
Looking ahead to what the future holds, both leaders believe that the broader lending industry must evolve to keep pace with the needs of modern borrowers. “Having worked at a few of the big lenders, what it comes down to is priorities and technology,” revealed Lovegrove. “Some lenders are working with older outdated systems… At Haventree Bank, we look at the experience from end to end to try to ensure we don’t have those bottlenecks. We embrace technology – we’re not going back to fax machines.” These operational tools are coupled with open dialogue. As Pandolfi explained, they meet with brokers annually to discuss what’s working and what’s potentially not working. “Their feedback is incredibly important. The great thing [at Haventree Bank] is we’re always keeping our brokers in the know and asking for feedback. Because we can’t fix what we don’t know is broken – we always want to make things smoother and easier for the broker and the borrower.” Because in an era where the definition of income is increasingly fluid, Haventree Bank is building the infrastructure, and mindset, to support borrowers whose financial strength lies beyond the balance sheet. As Pandolfi puts it: “The story matters to us. It’s not just black and white.”
CMP
No comments:
Post a Comment