Paul Demarco is an independent financial advisor (IFA) with ESPC Mortgages. We caught up with him to ask him more about the mortgage process with IFAs.
What documents should a buyer bring to their initial appointment with you?
Their latest payslip and bank statement.
What size of deposit is required? 5%, 10%, 25%?
Minimum 5% for residential and 25% for a buy to let.
Why would a buyer use an independent financial advisor over contacting their bank directly?
More choice, access to all the lenders across the market place and more mortgage products to choose from. We can also offer mortgage-related insurances as well such as Life cover and income protection.
What are the common mistakes that buyers make with their mortgage or that happen during their mortgage application?
Not disclosing all their debt commitments, for example credit card debt. The amounts have to be accurate . Another mistake they make is not seeking independent mortgage advice in the first instance.
How would someone know if they go direct to their bank or building society if they are getting the best deal?
What is a decision agremeent in principle and how do I get one?
The agreement in principle is simply a credit check on the individual to see if their credit is sufficient to obtain a mortgage and it also gives you your maximum mortgage amount that you can get.
What is the difference between a buy to let mortgage versus a regular mortgage?
Regular mortgages are commonly known as residential mortgages and these, in most cases, have to be arranged on a repayment basis. The deposit can be as low as 5%.
A buy to let is where you are renting out the property to tenants and you are not going to live in it. This can be arranged on an interest-only basis or a repayment basis. Minimum deposit is typically 25%.
If my house has been on the market for some time and hasn’t sold and I am thinking of arranging a buy to let mortgage to fund my purchase of another property, how do I do this?
This is commonly known as a let to buy mortgage where you remortgage away to another lender on to a buy to let basis and raise capital from your existing property to fund the deposit for your main residential property that you will now live in.
Another option is to obtain a consent to let from your existing lender and get a further advance of equity from that property, again to use as the deposit for the new residential property.