The importance of preparing a good proposal
By Matthew Rogers, assistant underwriter at Pivot
There is a strong argument to be made for spending a little more time when preparing a proposal for a lender. Given that each lender will vary on the information they need up front, it is perhaps understandable that the initial enquiry can sometimes contain little detail, especially if the borrower is looking to move quickly to get a quote and the enquiry is being sent to multiple lenders.
However, from our experience, providing a full picture of a deal from the outset can go a long way in not only helping get the deal approved, but also in allowing the borrower to complete on time and without any further costs.
While no lender is expecting countless hours to be spent putting together a proposal, a case supported with information not available in the public domain will help paint a picture for short-term lenders like Pivot, who manually underwrite all deals. Manual underwriting allows us to look at cases more fairly when assessing an application, and consider all the information provided, as opposed to automated underwriting (often seen with high street lenders) which will ultimately be limited by the data entered to a list of predetermined questions.
Making a good proposal isn’t just about providing the fundamentals; introducers also need to think about how to make their proposals stand out. This can easily become one of the most important steps in the process, particularly for non-vanilla loans, which may be difficult to place. Although at Pivot, we will undertake our own independent research into every proposal, any information which can help tell the story behind a deal will always help improve the likelihood of it being approved.
What’s more, from having such information up front, solutions can be created in cases that would otherwise have been rejected. For example, a conversation that was initially about a single asset refinance, which didn’t quite meet the borrower’s funding requirements, can quickly turn into a larger loan with charges on additional securities.
Nevertheless, having the fundamentals in a proposal, such as details on the borrower’s credit history, a description of the asset, a full breakdown on the use of funds and the proposed exit is equally as important. Providing an explanation of any adverse credit, for example, will mean a lender can consider this in the context of the transaction, rather than information coming as a surprise during the underwriting process. This ensures the deal is priced appropriately and loan documents would not have to be changed halfway through the process. Not only does this allow a deal to complete quicker, but also reduces the chance of a deal falling through, with the borrower having already paid legal and valuation fees.
In order to be flexible and help borrowers find solutions for their financing needs, having the correct information up front is key. Producing detailed and well-structured proposals is an important part of an introducer’s job role, and building a reputation for this can help introducers form relationships with lenders that can lead to quicker decisions and more approvals.