Nikki Brett, Borro’s Head of Underwriting & Credit spoke with Appreciating Assets to provide insights on how she approaches a case and what makes Borro different than other lenders:
1. What are the first things you look at when you receive a property/case?
Here are the key things I look for:
- Exit strategy / plan for the borrower to ensure the loan can be repaid
- Property value, type, and location
- Existing lending, any charges, and confirmation of title
- Borrower profile and experience
2. How is Borro different from other lenders when it comes to underwriting?
Borro is different because we can take other assets besides property. This means that if the property alone falls short of the underwriting criteria, we have flexibility to offer the client funds based on the value of their luxury assets.
3. You mentioned Borro’s loans for luxury assets. For those loans, the focus is on the asset, not the client. Is this the same for property?
The client themselves really only makes up 10% – 20% of what we look at for a property case. The main focus is split between the property itself, and the client’s exit strategy. We need to know the client has the means to pay back their loan.
4. Is there anything that is an immediate deal breaker?
There are certain types of property we just can’t work with e.g. land without planning permission. But generally if the deal is low risk and providing there is a viable exit plan, we will take a look with a view to making it work.
5. What are the types of situations that raise questions? Damp, poor insulation?
Things like damp can cause a problem, depending on the valuer’s comments further investigation may be required and remedial work undertaken prior to lending. If there are any agricultural ties or existing charges, we have to look in to them fully just to be comfortable that our security is not compromised and to ensure our lending is adequately secured. Leasehold properties with short leases can be tricky depending on how much time is left before expiry and whether they can be renewed.
6. How does the age of the property affect your approach?
Anything that is a new build is great security although there tends to be a mark-up in terms of sale price because they are brand new, and for new build flats this can cause an issue where re-finance is involved. With older properties, you may come across ones that are not noted on the Land Registry amongst other complications. We recently had an 18th Century property that suffered with damp but the valuer advised against taking action because the damp is considered consistent with age and any remedial action might affect the historical integrity of the house.
7. Buying/selling is all about location, location, location, what about underwriting?
Places like Central London, where you can expect to sell most property within 3-6 months, is seen as ideal security for us. We always have to consider the property’s resale potential. This doesn’t mean we are not happy to look at other locations but will want to carry out sufficient due diligence before making any final decisions on location suitability.
8. What is the one thing you think borrowers should know before they come to Borro for a property loan?
Borrowers need to think carefully about their ability to repay the loan at the end of the term. It’s very easy to state that the loan will be repaid by sale of the property or re-finance but the client needs to be fully informed and aware of the implications of borrowing short term and of any recourse on default.
9. How can/will technology make underwriting simpler for you and faster for the client?
It’s all about communication, keeping everyone up to date with progress of the case or where additional information or items are required. Our highly skilled IT team is currently creating a platform for this exact purpose to act as a communication tool with our intermediaries, solicitors and valuers. I believe this will be truly innovative and allow the whole process to be more informative and streamlined. The aim is to provide a smooth, painless, and quick process from start to finish for all parties involved resulting in excellent service for all our clients and intermediaries alike.