28 Jan Building a strong lender – broker relationship
Chris Oatway is a Director at LDNfinance and heads up the Specialist Finance division which includes development finance, commercial finance and bridging finance. Having worked in the industry for 18 years, Chris has honed his development finance expertise through funding a number of complex deals.
Chris prides himself on fast and high communication levels, building strong relationships with lenders and clients. He is therefore well placed to talk about the importance of building a strong lender – broker relationships.
Take a look below at what we asked Chris in a Q&A:
What are the three most important factors to ensure a good lender – broker relationship? Why is this important to you?
For me, deliverability and flexibility are key. We work in a dynamic market place and it is important that a lender can work around challenges and changes which will inevitably arise. This primarily comes in the lender’s products and underwriting, the more dynamic they can be, the more likely it is that we will get the deal over the line.
Throughout the whole process, communication is also so key, and it works both ways especially when deals are time critical. It is important to work as a team by being open with the lender and for the lender, it is crucial that they provide detailed feedback to me about their position on a deal so we can ensure the highest chance of success.
What is the biggest challenge you face when dealing with a lender? How do you overcome this?
The greatest difficulty I face is when the deal transitions from the initial enquiry stage into underwriting. At the beginning, I often find that lenders get off to a quick start but when the underwriter takes over, there can be a noticeable slowdown in communication; we can be provided incorrect information at the enquiry stage which causes delays later on if the deal is later declined at underwriting stage. It is difficult to overcome this because the situation is out of our hands but as standard, we do a very thorough amount of due diligence on each client before the case is presented as an initial enquiry. This can assist in the speed and accuracy of the assessment which helps all parties.
How do you manage expectations of the borrower when deal progress in dependant on the lender?
I think this is where it becomes so important to understand your lender and match the right client with the right lender. There is no point committing to time frames which are unachievable and so it is always best to work with a lender that is the right fit for the client and the specific deal.
In addition, there is no way that we can build a relationship with a client unless we can tell them upfront and confidently about time frames and the requirements which might come up further down the line. To be an effective broker it is essential to predict what challenges may be faced later on in a deal so they can be tackled early on and not impact the required timeframes.
How do you package deals to a lender? What do you consider the most important information to share?
At LDNfinance, we are strong believers of understanding the deal in full and considering whether we’d actually lend before sending it out to any funders. Our starting point is to check the numbers make sense. A financial appraisal is absolutely crucial, and I like to see plans and drawings in order to visualise what the borrower is actually building. If something does not look right to us, it is essential for us to do further due diligence to ascertain whether the deal could work for the lenders. We must understand the client, their experience and company set up. Comparables and any local agent opinions are key to understanding the local market. Once we know “the who”, “the what” and “the where” we can provide some guidance around the potential success of the project.
Furthermore, if the developer is less experienced it is important to present information clearly and thoroughly at the outset. Information which is useful to provide includes a short description of the scheme, an outline of planning conditions, the key financial details on the scheme, and the construction method.
What is the most valuable attribute a lender can have to make your processes as smooth as possible?
Communication is key, there is nothing more valuable than transparency to get a deal across the line.