RATEScore is Canada’s most sophisticated standardized underwriting scoring and pricing system, and it is the exclusive property of Magnetic Capital Group.
Borrowers don’t care who lends them the money they need, they only care about getting the cheapest price for their loan. But its not our job to serve the Borrower. It’s our job to price loans properly according to risk and complete our underwriting and due diligence on any particular borrower efficiently so we can make a fair offer quickly and compete based on that value rather than on price. RATEScore helps us do both at a very high level.
The RATEScore system assesses each application Magnetic receives across 15 key risk factors. It’s like a 15-point brake inspection at your local mechanic and the applicant can score up to 100 points in each category for a maximum score of 1500 points. An application must score a minimum of 900 points to be approved and the higher the score, the lower the risk so the better price the Borrower gets.
Six of the risk factors are related to the property that would act as collateral to secure the loan. RATEScore first assesses the type of property and its location. Then it evaluates how marketable the property is given its current state. And finally, our underwriters use a subjective scale to score the rootedness of the Borrower (how attached they appear to be to the property) and how much pride they take in owning it.
An additional six risk factors are related directly to the Borrower’s current financial circumstances. First, the system evaluates the Borrower’s income and employment status along with their ability to make the mortgage payments. Then RATEScore assesses the Borrowers credit repayment history across two lines – their track record paying other mortgages and their history with other creditors like credit card companies.
Finally, the system scores three risk factors related directly to the loan request made by the Borrower. It looks at what the funds will be used for, what percentage of the value of the property the loan request represents (referred to as the “loan to value ratio”) and how the Borrower proposes to pay back the loan when it matures which is commonly referred to as the “exit strategy”.
Only 24% of the applications we see score high enough in the RATEScore system to get approved. It’s a system designed to identify strong applicants who narrowly missed out on traditional bank financing and it’s a big reason why we have been able to provide such a smooth investment experience for so many Canadian Investors for as long as we have.
Book your FREE consultation now to learn more about RATEScore and what you can expect it to do for you. With Magnetic and RATEScore on your side, you’ll be investing in the highest quality private mortgages available every time.