Ever wondered what lenders are really looking for when you’re pitching for a property loan? It’s not just about numbers and spreadsheets – it’s about presenting a compelling story that gives them confidence in you and your project. After years in the lending world, I’ve boiled it down to a simple mnemonic: PARSR. Get these five elements right, and you’re well on your way to that coveted, “Yes!”
At Oxygen Business Finance, we support developers of varying experience, including readers and past features of Blue Bricks Magazine. From straightforward buy-to-lets to large, complex ‘mega-deals’, we’ve seen it all. So, regardless of the size of your portfolio, experience in the industry or the purchase price of your deal, all of the following rules still apply.
Person
You’re the star of the show, so make a great first impression. Lenders want to back people they can trust and believe in. Highlight your relevant experience and if there are gaps, explain how your kick-ass team fills them. Honesty is key – if there are skeletons in your closet (like a less-than-perfect credit report) put them out there early. Lenders hate surprises and being upfront shows integrity. Most issues can be addressed if you’re transparent.
Amount
Be specific about how much you need and why. Lenders like to ‘follow their money’, so give them a clear breakdown of costs. If it’s a refurb or development project, provide a detailed cost schedule – lenders are seasoned pros and will spot any fuzzy maths. Always include a contingency (at least 10%, but more for complex projects) – it’s better to come in under budget than go cap-in-hand for more funds.
Repayment Ability
This is the biggie – how will the lender get their money back and when? Lay out a clear exit strategy, like selling the property (back it up with solid comparables and realistic timelines) or refinancing (allow ample time and show evidence that it’s viable). And, have a ‘Plan B’ if your primary exit falls through – reducing the price, refinancing elsewhere, etc., Lenders want to see you’ve thought through all scenarios.
Security
While not the top priority (that’s you!) lenders still need to know their investment is properly secured. Use their preferred valuer to avoid delays and factor in legal fees (plus VAT and disbursements) for both parties. If you’re borrowing through a company, most lenders will want personal guarantees from directors or major shareholders – take this seriously, as you’re on the hook if things go south. Personal guarantee insurance can mitigate this risk.
Remuneration
Lenders are businesses too, so show you understand their need for a solid return on investment (ROI). The higher the perceived risk, the higher their charges – it’s just economics. Look at the whole package: interest (fixed or variable, simple or compound); fees (arrangement, admin, exit, etc.,) and any project-specific costs, like monitoring surveyor fees, drawdown fees, revaluations and non-utilisation fees. Getting this right, upfront, avoids nasty surprises later.
With a pitch that nails the PARSR elements, you’ll have lenders excited to back your next property venture. If you need help prepping, lean on your broker – they’ve got your back and can ensure you put your best foot forward. Now go get that money!
Seeing From Both Sides
We understand both a lender’s and an investor’s perspectives, which puts us in the perfect position to help you secure better finance products for your deals.
If you have an opportunity in the pipeline that you’d like an experienced set of eyes to look at, or if you want to chat with me or my team in advance of a deal, to see how we can help you, then get in touch using the details below:
Email: nigel@askoxygen.co.uk
Website: https://askoxygen.co.uk/
Tel: 01943 243159