YOU’VE JUST VIEWED YOUR “DREAM HOME”. HOWEVER, HAVEN’T YET CONSIDERED WHETHER YOU CAN AFFORD TO BUY IT OR NOT.
SO, WHAT’S THE NEXT STEP? WE SUGGEST YOU GET IN TOUCH WITH A MORTGAGE ADVISOR.
Whether you are a first time buyer, moving home or thinking of becoming a property investor, finding a mortgage can be daunting. That’s why we met up with Paul Demarco, one of ESPC’s experienced mortgage advisors, and put some frequently asked questions to him. Find out what Paul had to say below.
What is the first thing you would recommend a person do before they apply for lending?
Obtain independent mortgage advice from an appropriately qualified and regulated mortgage advisor. A mortgage advisor can then obtain an agreement in principle for a an applicant. An agreement in principal is a soft or hard footprint credit check. This is to establish whether an applicant can actually obtain a mortgage and how much of a mortgage. This should always be the first step in the process, even before making an offer on a property via a solicitor.
What is a mortgage and when would someone need one?
A legal agreement by which a bank, building society, etc. lends money at interest in exchange for taking title of the debtor’s property, with the condition that the conveyance of title becomes void upon the payment of the debt. You would usually need one when you buy a house.
What type of mortgage loans are there and how do they differ?
The main types of mortgage’s are:- first time buyers, home movers, second home, guarantor and buy to let. First time buyers and home movers are mortgages for residential purposes. Guarantor mortgages are also usually for residential purposes. Buy to let mortgages are when an applicant wants to buy a property to let out and is classed as a type of long-term investment.
Other types of mortgage’s out there are, repayment mortgage’s that you pay both the capital and the interest back and the mortgage debt will eventually reduce to zero. Interest only mortgage, this, you only pay the interest and not any of the capital. Therefore, the outstanding mortgage debt will remain at the end of the mortgage term.
How do lenders assess a person’s affordability?
A lender will assess a person’s affordability by looking at their type of income and debts (loans and credit card debt). Along with childcare costs, an assessment of their credit rating and overall expenditure.
How can a person applying for a mortgage make their credit score favourable for lending?
First things first, make sure that you are on the electoral register. Secondly, don’t miss any credit card payments, personal loan payments or car loan payments.
What information or documents do you need in order to apply for lending?
Each lender differs, however the main details/documents required are:- Address ID. Photographic ID (such as a passport or a driver’s license). Proof of deposit – whether it be from own personal savings, a gift or the sale of another property. Bank statements. Pay slips. If self-employed, proof of income via HMRC tax documentation or accounts. And finally, the details of the property interested in.
What costs are involved in setting up a mortgage?
- Product or arrangement fees, which vary from zero to approx. £1,000.
- Legal/ Solicitors fees.
- Survey fee (if buying a new build property)
How long does it take to receive a mortgage in principal and how long is this valid for?
Usually one working day, however it could be longer depending on how complex an applicants circumstances are. The agreement usually lasts for 90 days but can be refreshed as many times as an applicant wishes.
If you are looking to start your mortgage journey, why not contact Paul today to arrange an appointment. Or alternatively, visit ESPC Property Information Centre, 107 George Street, Edinburgh.
Get in touch with one of our experienced solicitors today and let us guide you through the buying process!