It is crucial for lenders to recognise what brokers want (with apologies to Mel Gibson and Helen Hunt). A review of Business Development Managers’ comments demonstrates that there are avoidable issues between brokers and lenders and that removing this friction is the way to create lasting, valued relationships.
First, transparency. Brokers need to both know and understand the lender’s criteria so it must be clearly defined on the lenders’ web sites and in their sales literature with a minimum of “froms” and “up-tos”. Let the broker and his borrower know where they stand from day one.
If there is a need to charge more than the headline interest rate, show this in the rate chart as an exception to standard terms and avoid changes after Heads of Terms have been issued. Brokers, play your part, and make sure everything is disclosed before terms are issues. An exploratory conversation with your BDM will help the process.
To show commitment to the borrower, brokers wish to see the loan moving forward as soon as possible so lenders need to provide a simple but positive response by issuing the HOTs as soon as they can. They can reduce the number of questions asked as some of the further detail can be provided during the due diligence process. Again, brokers help the lender to help you, ensure the Application Form is fully completed and that useful supporting documents and explanations are provided at the beginning.
And the fundamental! Brokers wish to be kept fully informed with the bad news as well as the good. Where there are problems, lenders must discuss them with their brokers and using the ‘phone is so much more productive than email exchanges. Experience proves that more issues will be resolved by the borrower, broker and lender sitting down together and sharing a frank discussion. However, if the lender recognises a solution cannot be found, a quick no is a must.
Many disappointments could be avoided by an early review of estimated valuations. Since the EU Referendum, some values have moved downwards and valuers have become more cautious and many reports contain critical caveats. So, lenders and brokers should adopt a realistic approach to estimating values, checking them on line, particularly where the lenders maximum LTV is being relied upon.
Brokers want certainty and speed of completion. Lenders need to be open with their introducers when they have doubts. Often time is of the essence and it is possible for lenders to reduce the due diligence period. For residential loans up to £1m or so, brokers can instruct a previously agreed panel valuer and request the lender to rely on title and search insurance instead of a solicitor’s detailed report. Both speed up the process.
Finally, like the Boy Scouts, brokers be prepared! Provide detailed information at outset and help the lender to help you. It is a three-way partnership, borrower, broker and lender and do remember, lenders need to lend as much as borrowers need to borrow!