Using an IFA to help obtain Buy to Let finance
In order to fund the new Buy to Let property we had agreed to pay just over £37,500 for, our intention is to fund the purchase of by taking out a mortgage on to raise equity against one of our other existing properties.
In order to get the new mortage, we decided to use an Independent Financial Advisor (IFA). This was the first time I had used an IFA and I had hoped that the IFA would be able to access funding and mortgages that were not readily available for to the general public on the internet and I also hoped he would be able to take on this task and save me the stress and hassle. Finally using the IFA would be free, since he would be paid through commisson paid by the mortgage vendor. This sounded like a win, win situation.
Progress on the remortgage has been slower than expected due to mine and my financial advisor’s holidays in October. He didn’t sort out all the paper work before my 1 week vacation and he was then on holiday himself for a week, so this effectively wasted 2 weeks.
Also my self employed / company director status resulted in us having to select another mortgage provider. Most buy to let mortgages are based your ability to give the mortgage company a 25 to 35% deposit and also the annaul rental yield on the property being sufficent to more than cover the mortgage payments. Most mortgage companies aren’t interested in the borrowers income, as long as they have a good credit history which I do. However the first mortgage company the IFA selected found it difficult to fully understand my multiple active and passive income portfolio and so we had to switch to another vendor.
The final issue to add to this is that the tenant at property number 2 was not responding to my letting agents calls and letters, which means the surveyors have been unable to get access to carry out the valuation.
My letting agent have written to the tenant stating unless they hear from her by Thursday 4th November they will arrange to give surveyor their spare key for access.
All in all, this means completion on Friday 11th November is now going to be very tight. I’ve now started to move other funds around so that I’m not dependent on the mortgage of property number 2 to fund the purchase of property number 3 in the short term. The IFA mentioned he was going to speak to my solicitor who he shares office space to see if the seller might agree to moving the date out, dependent on the progress of the mortgage this week.
Ideally I would like to stick with the Friday 11th entry date, since I have tradesmen arranged. However if the mortgage is delayed,then pushing the entry date out would help my cash flow.