BUY-TO-LET MORTGAGES

Getting a mortgage may seem easy on the face of it, but with so many options available, a wide range of lenders to choose from, varying criteria and lending requirements based on the different lenders then the best way to obtain the right mortgage for your circumstances would be to employ a qualified mortgage broker.

The broker will have in-depth knowledge of the lender rates, criteria, and affordability calculations and will be able to advise you on the right mortgage for your needs.

To calculate mortgage payments it is best to speak to a mortgage broker who will be able to work out the mortgage payments based on the amount borrowed, the applicable mortgage rate, and also the term that the mortgage is taken.

Most mortgages are taken out on a repayment basis and therefore the variables of amount, term, and rate need to be factored in.

If you were to take out an interest-only mortgage, assuming you met the qualifying criteria set by the lender, then to cost is simply the total loan amount (including any fees) multiplied by the initial rate and then divided by 12.

Step 1 – Finding a property and agreeing on a purchase price

So, you have reviewed your circumstances and know what you can afford, and you have found the perfect property. Once you have negotiated and agreed on the purchase price the estate agent/developer will issue all parties with a memorandum of sale which will include all the necessary information for you and the vendor. This is not a binding contract but confirms the agreed purchase price at this point.

Step 2 – Mortgage application and instructing solicitors

The next stage is to confirm that you have found a house and had your offer agreed to your mortgage broker/advisor. They will then provide the necessary recommendations as well as gather all the necessary information and evidence required to submit your mortgage application.

At this point, you will also need to instruct a solicitor to open a file and start the preliminary checks to be able to act for you in your purchase.

Step 3 – Gaining agreement for the mortgage.

The mortgage application has been submitted and underwritten, all obstacles have been cleared and all additional queries have been satisfied for the lender to produce a mortgage offer.

Step 4 – Solicitor searches and making enquiries

Once the mortgage has been agreed and offered, your solicitor will start in earnest the rest of the work that they will have to do to ensure that the property you are buying is exactly what you are expecting. They may have completed some work, but without a mortgage offer, some solicitors will not want to do too much work as this will come at a cost if the mortgage isn’t offered and the purchase can’t complete.

The solicitors will carry out all appropriate searches (ensuring the property is registered property, boundaries are accurate, no disputes currently in place etc…) and also liaise with the acting solicitor on the vendor’s side to have any ‘enquiries’ (queries) satisfied prior to confirm they are happy for you to proceed with the purchase.

Step 5 – Managing the chain

If the property purchase is part of a ‘chain’ i.e. other purchases and sales that run from the bottom of the ladder to the top of the ladder then your solicitor will need to liaise with the other solicitors within the chain to arrange an appropriate exchange date – when all contracts are signed and deposits are sent up the chain.

Step 6 – Exchanging contracts

Once the chain has been agreed and everyone is ready, the solicitors will agree on an ‘exchange’ date. This is the moment that you sign the formal paperwork to say that you will, in law, buy the property. It is also the time that you will provide the deposit funds to be sent to the vendors, this will usually be an agreed percentage of the purchase price. At the point that contracts are signed and the deposit money is sent you are legally obliged to complete on the purchase. If you decide to not go ahead with the purchase at this point then you effectively forfeit the deposit money that you have put down.

Step 7 – Completion

Once the contracts have been signed at the exchange the solicitors will agree to a completion date. At this point, they send the Certificate of Title to the lender providing your mortgage as proof that everything is now in place to complete. The lender sends the mortgage funds to your solicitor and your solicitor will send these funds to the vendor’s solicitor to complete the purchase!

That is an extremely common question that we get asked.

How much you can borrow depends on a number of variables ranging from how much you earn, what debts you have in place that will continue, your family circumstances, your age, and your credit profile.

The best thing is to speak to a qualified mortgage broker who will be able to review your current financial position and then research the market to find out what the maximum affordability is for your unique financial position.

A lifetime mortgage is a mortgage generally available to people aged over 55 years old.

The mortgage is taken out with no requirement to have to repay the original mortgage amount until they die.

They are generally taken out on an interest-only basis where the interest payments are made monthly. There are options to repay the mortgage amount should the person move/sell the property or decide that they wish to repay the mortgage on a normal repayment basis.

They work like any normal mortgage in that they are based on the income and financial position of the applicant and a normal mortgage application process is undertaken.

A mortgage in principle is an initial assessment completed by the lender where they look at the income position, debt position, lending amount, family position, and all other necessary income, including a hard or soft credit search, to be able to confirm ‘in principle’ that they would be happy to lend the applicant the money to purchase a home/property.

It is not a mortgage offer but gives a good indication of the ability to be able to apply for a mortgage and to be agreed to the mortgage assuming that all the information presented to the lender can be evidenced when a full mortgage application is submitted.