Why you don’t answer the question the lender asks
This is always a strange one to explain, that the question the lender asks is rarely the one they want an answer to. Lenders will ask a question to get an answer but the question is rarely the one they want answered, they don’t like asking the real question just in case you give the answer you think they want.
Confused? I don’t blame you.
Think of it like this.
Let me ask you the following question ‘Who will win the next general election?’
Your answer will be one of two parties, probably. Simple question really, it is one based on your opinion.
The real answer is that you cannot answer the question because you don’t have enough information, after all we don’t know who will be in charge of any political party come the next election, we don’t know when it will be, what the economy, brexit, the wider world or pretty much anything else will look like at such time.
Your answer will have been driven by your own political beliefs, maybe some media cover, maybe some foresight. You may even answer one way but say you hope for something different. The fact is the question is simple, the answer is more difficult.
Lenders do the same thing. They ask a question where there may appear to be a simple answer but actually they are driving at something else. If I want to learn about your political leaning then I may not want to ask direct so the general election question works well in giving me an insight.
It’s about insight
It’s insight the lender wants.
Think of a common lender question, say ‘how much is your council tax’. The lender has minimal interest in how much the council charge you, they are instead using the answer to compare against your valuation of your home, the two amounts should correlate. Lenders refer to this as a ‘double check’. You may also be asked how long you have run your business, the lender isn’t planning on sending an anniversary card, they are driving at your level of experience.
If you don’t understand the real question being asked then you can easily dig yourself a hole, not because you have anything to hide but simply because it can be easy to misinterpret the question. The experience question falls into this category, you may have bags of experience in what you do but only a few years running your business. The best answer may be ‘2 years running my business but 20 years in total in my industry’, without the narrative you short change yourself.
My point of advice is to think about the question and think about the answer, it is easy to undersell what you do and make life harder than it needs to be.
By Dave Farmer