Thinking · Lending & Underwriting
What Lenders Look For First
Before a lender gets into every document and calculation, there is an initial judgement: does this case make sense quickly enough to deserve deeper underwriting?
The first five minutes
Lenders do not begin with every detail. They begin with coherence.
People often assume lending decisions begin with a spreadsheet.
In practice, the first pass is usually much simpler.
What is the asset? Who is borrowing? What are they trying to do? How much do they need? What changes during the loan term? How is the lender repaid?
If those answers are clear, the case earns the right to move into deeper underwriting.
If they are confused, contradictory or incomplete, everything that follows becomes harder.
The first hurdle is rarely detail. It is whether the deal makes enough sense for the detail to be worth examining.
That is the distinction I want this article to make. What Makes A Property Deal Fundable? looks at the whole underwriting picture. This piece is narrower: the initial signals that shape a lender’s first impression.
Six first-pass questions
What I want to understand first.
I want a simple explanation of the property, transaction and reason the opportunity exists. If the borrower cannot explain the deal clearly, that is an early warning sign.
Experience helps, but I am also looking for judgement, organisation, transparency and a realistic understanding of the asset.
Acquisition, refinance, works, title restructuring, lease extension or another purpose each creates different risks. The funding purpose should be explicit.
I want to understand the equity contribution, liquidity and whether there is enough capital for fees, overruns and the parts of the deal the lender is not funding.
Sale and refinance are not complete answers by themselves. The first pass should show why that exit is realistic.
A borrower who can identify the pressure points usually creates more confidence than one who insists the transaction has no meaningful risk.
Clarity
A complicated deal can still have a simple story.
Some transactions genuinely are complicated. That is not a problem in itself.
Title splits, lease extensions, mixed-use assets, refurbishment and unusual exits can all involve multiple parties and moving parts.
But complexity should not prevent clarity.
A strong borrower can usually explain the transaction in a few sentences: what they are buying, why the opportunity exists, what they are going to change and how the lender gets repaid.
If it takes twenty minutes to discover the basic purpose of the facility, I start to wonder whether the borrower has fully thought through the transaction themselves.
That is why presentation matters. Not because lenders need glossy documents, but because clear presentation usually reflects clear thinking.
Credibility
The borrower is being assessed before the CV is analysed.
Borrower assessment starts almost immediately.
Do they know the numbers without inventing them as they go? Can they explain the asset? Are they open about the difficult parts? Do they understand their own contribution? Are they realistic about timing?
I am not looking for somebody to know every answer instantly. I am looking for the difference between not knowing yet and not having thought about it.
Those are very different things.
A borrower who says, “I do not yet have the final premium figure; the specialist valuer is reporting next week,” can still sound credible. A borrower who has built the entire deal around a figure nobody has verified is a different proposition.
This is where transparency matters. Known problems disclosed early can be assessed. Problems discovered late make the lender question what else may still be missing.
Realism
Confidence is not the same as optimism.
The cases that make me nervous are not necessarily the risky ones. They are often the ones where the borrower cannot see the risk.
Property deals rarely proceed exactly as planned. Valuations change. Works uncover problems. legal processes take longer. Sales fall through. Refinance criteria move.
A borrower who has considered those possibilities normally presents a stronger case.
I am more comfortable hearing, “If the refinance comes in lower, we can sell two units,” than, “The refinance will definitely be fine.”
That does not mean every transaction needs three fully developed exits. It means the borrower should understand the consequences if the main assumption moves.
One of the quickest credibility tests: ask what would make the borrower walk away from the transaction. If the answer is “nothing”, I usually want to understand why.
The initial numbers
I do not need every calculation first. I need the numbers that define the risk.
The first-pass financial picture can be surprisingly compact.
Purchase price. Current value. Funding requirement. Borrower contribution. Works or value-creation costs. Expected completed value. Current or expected income. Loan term. Exit.
Those numbers often tell me whether the broad structure is plausible before detailed underwriting begins.
If a borrower is buying at £800,000, wants £790,000 net, has no funds for costs and the exit depends on a £1.2 million valuation that has no evidence behind it, I do not need a fifty-tab model to see where the conversation needs to go.
Equally, if the broad numbers make sense, the detailed underwriting can then test and refine them.
What gets attention
Strong first impressions are usually quiet.
The cases that attract serious lender attention are not always the ones with the biggest headline profit or the largest discount.
Often they are the ones that arrive with a clear story, sensible numbers, known risks, supporting evidence and a borrower who understands exactly what they are asking for.
There is no need to oversell the transaction.
In fact, overselling can work against the borrower. Phrases such as “zero risk”, “guaranteed uplift”, “can’t lose” or “the valuer will definitely agree” do not create confidence.
Evidence does.
That is why the first conversation should make it easy for the lender to ask better questions rather than force them to spend time discovering the basics.
Where this fits
First-pass confidence is only the beginning of underwriting.
A strong first impression does not mean a deal is approved.
Valuation, legal due diligence, credit assessment, security, borrower checks, source of funds, works, exit evidence and lender-specific criteria still have to be satisfied.
But the quality of the first pass matters because it tells the lender whether the case is coherent enough to invest time in.
For the fuller framework, read What Makes A Property Deal Fundable?. For the three factors I personally come back to when assessing transactions, read 3 Things I Look At Before Funding Any Deal.
Those pieces deal with the deeper underwriting. This one is about the gate before the gate.
Final thought
The first thing a lender is really looking for is confidence in execution.
Not blind confidence. Not confidence created by a polished deck.
Confidence that the borrower knows what they are doing, understands why the opportunity exists, has thought about the downside and has a credible route to repay the capital.
The numbers matter enormously. But before a lender gets into every number, they are usually deciding whether the person and the story deserve deeper examination.
That is why clarity matters so much.
If the case makes sense quickly, the lender can spend their time underwriting the real risks instead of trying to work out what the transaction is.
The strongest first impression is not “this deal is amazing”. It is “this borrower understands exactly what they are doing”.
General information only. This article reflects my experience of property finance and lender decision-making. It is not financial, legal, tax, valuation or investment advice, and individual lenders apply their own underwriting and credit criteria.
A first submission that makes the decision easier
Start with a short summary that connects the property, borrower, funding requirement and exit. State the agreed price or existing debt, the requested net proceeds, the proposed term and the contribution available for costs. If a number is an estimate, label it and identify how it will be verified.
Follow that with a compact evidence pack: unit or tenancy schedule where relevant, current property information, proposed works, available valuation evidence and the repayment plan. Disclose adverse credit, unusual ownership, occupation or title concerns at the start. The point is to direct attention to the facts that could change eligibility.
Show the difference between the target request and the minimum amount needed to complete. A lender might be able to offer a smaller facility, but that only helps if the remaining cash can be provided. A quote that looks acceptable in isolation can still leave the transaction unfunded.
Finally, identify the next commitment and its date. Exchange, auction completion and an expiring facility create different constraints. Clear information lets the lender distinguish a case that needs a fast answer from one that first needs its structure resolved.