Providing Support for Transitional Mortgages

Blog-Date-1Sep 18, 2019

In the mortgage lending business, everyone has their niche. Our niche at Pillar is to provide support to mortgage borrowers facing a challenging financial situation and they need flexibility from lenders to help them transition to a better position.

We outline here a clear overview of Pillar’s role within the mortgage lending ecosystem and how we differ from the other lenders in this space.

Short-term help for a better future

As a short-term lender, Pillar serves as a stepping stone for transitional borrowers who are facing financial challenges. Sometimes these challenges involve financial difficulty, such as a discharged bankruptcy or low credit score. Other times they involve borrowers with a financial situation that simply falls outside banks’ normal lending criteria, such as self-employed or seasonally employed individuals.

At Pillar, we provide support with mortgages that have 1- or 2-year terms so that these borrowers can find their feet financially before making the transition to an institutional lender. It’s not about long-term lending, nor is it about gouging vulnerable borrowers. Rather, our approach is focused on helping mortgage borrowers make the shift to a better financial position.

Pairing flexibility with high standards

Our approach comes down to flexibility. This means that we make concessions on parts of a deal where banks may be rigid and simply choose not to lend:

  • At Pillar, we might accept one year of tax returns from a self-employed individual together with their year-to-date bank statements, as opposed to two years of tax returns required by institutional lenders.
  • Institutional lenders base their mortgage stress tests on 25-year amortization. Pillar can stretch the amortization to 40 years to offer borrowers lower monthly payments.

While we embrace flexibility, there are several things that we don’t do:

  • Second mortgages. We focus exclusively on first mortgages.
  • Equity lending. We focus on helping borrowers improve their financial position, not gouging them with exorbitant home equity loans.
  • Capitalize costs and fees. We deduct costs and fees from the amount disbursed to borrowers, ensuring their LTV remains capped at a maximum of 80%.

While flexibility is central to our approach, it should not be confused with low standards. Since we always aim for our borrowers to make a smooth transition to an institutional lender within 1–2 years, we need to ensure that they’ll be in a position to meet institutional lenders’ criteria. As a result, our application process is rigorous and calls for more extensive documentation compared with many other private lenders.

Helping borrowers with solution-based lending

By building strong partnerships with our broker network, we support borrowers with transitional mortgage lending and genuine care for their financial well-being. From tackling tough cases with flexible terms to providing mortgages with up to 80% LTV in rural areas, we set ourselves apart within the market as a solution-based lender.

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