Alternative Lender’s Hierarchy of Needs

Jessica Yang August 3, 2022

Alternative Lender’s Hierarchy of Needs

Embrace a hierarchy that makes alternative lending accessible and effective.

Entrepreneurs often wear many hats, for example, the sales-and-marketing hat, the finance hat, etc. For this reason, many of you may be familiar with Maslow’s Hierarchy of Needs.

If not, here’s a quick explanation: 

Maslow’s hierarchy of needs is a five-tier model of human needs. “Needs lower down in the hierarchy must be satisfied before individuals can attend to needs higher up.”

For example, the bottom and top of Maslow’s hierarchy of needs are physiological need (food and clothing), and self-actualization (the desire to become the most that one can be).

At Neighbourhood, we actively seek improvements in our broker partners’ journey. To better support their understanding of alt-lending, we created Alternative-Lender’s Hierarchy of Needs (image above) based on what we think is valued more in alt-lending criteria.

These needs are:

1. Location

   • Neighbourhood lend on residential properties located in urban and suburban areas (properties within 50km of a city with 100K+ people in BC, AB, MB, ON, QC, and NS).

2. Property Type

   • Most Alt-lenders have eligible and ineligible property types they lend on. Neighbourhood lend on single-family detached homes, semi-detached homes, condos, duplexes, and triplexes (or fourplexes in Quebec).

3. LTV

   • Neighbourhood's LTV is up to 75% for Purchases and Refinances subject to credit, or up to 80% with a co-lender.

4. Credit

   • Neighbourhood's Minimum beacon is 500+ with no existing mortgage arrears, past bankruptcies and consumer proposals are okay. The average credit score among Neighbourhood's 3200+ completed deals is 695.

5. Income

   • Borrowers must have the capacity to pay the loan, or an exit strategy. Alt-Lenders like Neighbourhood help borrowers with irregular and unestablished income when their part-time gig economy earning sources aren’t included as part of total income.

6. Exit Strategies

   • If the borrower cannot pay through traditional means, we need an exit strategy. An exit strategy is a strategic plan to repay the mortgage. The most common exit strategy is selling the property.

The Alternative-Lender’s Hierarchy of Needs helps brokers and borrowers navigate the lending landscape effectively, maximizing approval rates and aligning mortgage products with the borrowers’ unique circumstances. By understanding and prioritizing these needs, brokers can offer more tailored solutions, enhancing satisfaction and trust in alternative lending as a viable option.

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Author Profile

Jessica Yang Marketing Manager at Neighbourhood Holdings

Jessica Yang is the Marketing Manager at Neighbourhood Holdings, where she leads marketing campaigns and content strategy. As a UBC Media Studies graduate, Jessica also completed BrainStation’s Digital Marketing Program and became a BCFSA-licensed mortgage broker.

Beyond her professional pursuits, Jessica enjoys travelling and documenting her experiences through vlogging, finding inspiration in exploring new cultures and sharing her journey with others.