"In the current environment, the strength and certainty of funding should be amongst the top considerations when you are choosing the right product and lender for your clients."
One recent trend I’ve noticed on LinkedIn and feedback from my team of business development managers is the growing number of brokers who are frustrated by lenders pulling out of deals once they have been agreed.
It’s a worrying development that puts brokers in a difficult position and can leave clients frustrated and out of pocket, so how can you guard against being let down by a lender?
In the current environment, the strength and certainty of funding should be amongst the top considerations when you are choosing the right product and lender for your clients.
Your relationship with your BDM is key. A good BDM will answer any questions that you have about the certainty of a lender’s funding and give you the confidence that you need for your client’s deal.
Good BDMs will also keep you informed as the case is progressing. For many BDMs, their work stops at the point of submission but for a good BDM, that’s just the beginning. They’ll help to keep your case progressing and give you advance warning of any hiccups that might be on the horizon, helping you to keep your clients up to date.
The first thing is to ask your BDM whether they rely on a funding line from a third party. Many lenders in the specialist sector rely on third party funding, and this isn’t necessarily a bad thing, but if your lender does, you may want to ask whether the funding line is soon scheduled for renewal. Also check whether the lender has more than one funding line, with different institutions and renewal dates, to ensure continuity of service. At Castle Trust, our loans are funded by Fortress Bonds, investment products available to the public. That means that we are fully in control of our funding line and aren’t beholden to a third party funder.
Another consideration is the commitment of the lender and its backers to the market. A number of new entrants have stepped forward in recent years, which is great for competition, but not every lender will have the same level of commitment from their shareholder and, if the going gets tough, there is a chance that some might take a step back.
Also consider the lender’s experience of lending throughout different economic cycles. This applies to both the company and the individuals within the organisation. Lending in a stable environment is easy. The art is in continuing to provide consistent lending decisions when the landscape becomes more challenging. Our team have weathered the storms of many economic cycles and are well equipped to provide consistency regardless of the current environment.
Certainty of funding is a key consideration in the current market and it’s a growing concern amongst brokers. Make sure that you ask your BDM the right questions, so that you can proceed with confidence.
