As competition from lenders increases, it is of paramount importance that brokers have a robust understanding of a lender’s source and depth of funding to ensure they are securing borrowers the right type of financing.

Underpinning everything is the variety of funding lines available to lenders. How much money do they have and how quickly can they access it? Does the lender have absolute discretion over the money they lend? Are they reliant on recycling funds before they can write new loans? The more successful lenders will have a diverse range of funding sources, perhaps with a combination of retail and institutional money or with separate commercial and residential credit lines.

When it comes to considering which lender is best suited to their client, brokers need to ask key questions such as: “Do they have a proven track record?”, “Have they lent through the tougher times and emerged in a stronger position?” and “How do they treat borrowers if things don’t go to plan?” The answers to these questions will tell you a lot about a lender, their ability to deliver and how they will treat you and your client once the loan has completed, regardless of difficulties and challenges.

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Brokers should also consider the type of loan they are placing and look carefully at the experience that the lender (and their funder) has of delivering such loans. Take development finance, for example, which is significantly higher up the risk curve than more vanilla investment finance. Has the lender dealt with the complexities that often arise once a build is underway? For development or refurbishment finance, brokers should also consider whether there is any risk of the lender getting cold feet halfway through.

We’ve seen developers left high and dry as funding is pulled before the scheme is anywhere near completion. Added to this, the best lenders will have talented teams that really understand the macro landscape, ideally combining a mix of real estate and financial services backgrounds. Construction and labour costs, monetary policy, regional demand/supply dynamics – all of these impact on the development process and should be factors in the back of a lender’s mind when committing funds.

While it is an exciting time for specialist property lending, it’s a competitive landscape framed within an uncertain economic backdrop. Against this, the best brokers need to be constantly considering the above, taking an almost forensic approach to their decision-making process and successfully navigating the increasingly crowded lending landscape. By doing so, they’ll avoid poor lenders, ensure that their clients get an optimal financing solution and be doing business with them for many years to come.