FAQs - Applying

Lending policy/mortgage application criteria

How much can we borrow with share to buy?

As the struggle to buy a property is a key motivation for people sharing to buy, we have ensured that our mortgage panel includes lenders likely to offer relatively generous salary multiples for two applicants, e.g. in excess of three times joint salaries. However, we feel that this should always be within limits that are prudent and affordable.

Uniquely, we are able to offer mortgages that will take into account not just one or two, but three or four incomes. That said, each lender on our panel has a different approach to calculating how much you can borrow, but by entering some personal information into our secure mortgage illustration tool we can provide you with an indication of how much you could borrow, together with an estimate of the monthly repayments.

How many people can apply for a share to buy mortgage?

We are able to arrange for mortgages for one, two, three or four applicants. What makes us different is that we are able to take up to four incomes into account. However, even if you are applying on your own or in a couple, we believe that we offer an attractive range of products and we do not charge any fees for our service.

Is there an age-limit?

There is no age-limit per se. However, each lender will have a rule on the maximum age you can be at the end of the mortgage term - this ranges from 70 to 85. If your mortgage term takes you past retirement age they may also need assurance of your retirement income. We are pleased to say that if you are looking to take out a joint mortgage with family members, e.g. a parent and son/daughter, we have lenders on our panel who are flexible enough to consider applicants close to or past retirement age.

What is a joint mortgage?

A joint mortgage is where more than one person takes out a mortgage together; the key point being that this will be offered on the basis that all applicants are 'jointly and severally liable' for repaying the loan, and for this reason it is sensible to consider a framework such as the free share to buy legal agreement for taking out a joint mortgage with friends. Click here for more information on Joint Mortgages.

Agreement in principle

What is an agreement in principle?

An 'agreement in principle' is an agreement from a mortgage lender that in principle they will lend you a specified sum for property purchase (subject to valuation of the property, verification of income and confirmation of any other checks they require).Therefore, obtaining an agreement in principle can be an excellent way to know how much you can afford when you start looking for a property. For this reason the 'agreement in principle' is an important part of our offering and very popular with our customers.

Why is it a good idea to obtain an agreement in principle?

Many customers find that it is beneficial to have the confidence of knowing they can definitely apply for a mortgage when they start looking at property. However it should be appreciated that there are two types of Agreement in Principle:

1. Those that leave a record of the check (footprint) on your credit file.
2. Those that leave no record.

As your credit score could be adversely affected by leaving several footprints, when you ask for a non-specific agreement in principle without specifying a lender (just writing 'to be confirmed') this will not be credit scored, but we will provide a detailed illustration. You can then make your choice of a mortgage and tell us, when you are ready, to obtain a decision from the relevant lender which will be credit scored.

How do I obtain an agreement in principle?

Just go to the agreement in principle page. You will find a detailed explanation of how to apply and the different types of agreement in principle available. While we offer a paper application option, generally people choose to apply online and the important thing to remember is that if there is more than one applicant, only one of you should start the online application and in a few easy steps you will be able to create an application form that all applicants can then access independently, in their own time.

What happens to my agreement in principle application when it is submitted?

No applications submitted through our site are ever sent directly to a lender. We will always check all applications received before forwarding. With an agreement in principle, it will depend whether you have specified a lender and product or not.

If you have gone for a 'non-specific' agreement in principle option writing lender/product 'to be confirmed', on receipt of your completed form we will provide a detailed illustration of products you could apply for. When you are happy with your choice and feel that the time is right to get a decision from a lender (e.g. because you have made or are intending to make an offer on a property) you just instruct us accordingly and we can obtain a decision from a lender in a short period of time.

If you are successful, we will confirm this in writing and automatically upgrade your application on our server to a full mortgage application so that you can add property and payment details when you are ready to apply in full.

Alternatively, if you have already received a detailed illustration before you apply, you can specify the lender and product of your choice on the agreement in principle application form and as soon as we have received and checked the completed application, we will go direct to that lender to obtain a decision. You can read more information about the different options on our agreement in principle pages.

What if my application fails?

Most lenders base their assessment on either a credit search or a credit score. It may sometimes occur that you fail such an assessment due to false or incorrect information, in which case, it may be necessary to obtain a copy of your credit file in order to rectify the situation. It is also important to answer all questions on the application form honestly and comprehensively - this is because if a credit search indicates that you have a loan or credit card which you did not declare on your application the lender may decline your application.

If you have lived in shared rented accommodation it is possible that a previous occupant has had several bad debts registered there. If this person had the same surname, then it would be necessary to show that it did not apply to the applicant. It can sometimes be triggered by a lack of previous credit history in which case the application for and very modest use of a credit card may assist.

What are credit checks and how can I check my credit reference?

A credit check is made against a person's name and their address to establish if they have been subject to a County Court Judgement for debt or are in arrears, or have been in arrears on any credit agreement.

Applicants for a share to buy mortgage are subject to the lender's normal lending criteria. Your application may fail if one of you has a credit reference that fails to pass credit scoring (though there are other potential reasons for failing). For this reason, all applicants are recommended to check their credit reference with a credit agency to ensure that there are no errors. To find more information on obtaining a copy of your credit reference, visit the following websites of Britain's two main credit agencies, Equifax and Experian:

• www.uk.experian.com
• www.equifax.co.uk

How is it any different obtaining an agreement in principle for a joint mortgage/shared mortgage with friends or family?

Up to four applicants can apply for an agreement in principle at sharetobuy.com. Whether you are applying on your own, as a couple or on a joint mortgage with two or three friends, we will do our best to obtain an agreement in principle for you.

Mortgage application

How do I apply for a share to buy mortgage?

If you have found a property that you like and had your offer accepted by the vendor, you should make a full mortgage application where you enter both your personal details and details about the property, your solicitor etc. If you have not yet found a property but would like to know that a lender would lend you the amount you require, you should consider applying for an agreement in principle. Click here for detailed information on the application and house buying process.

How long does it take to apply for the mortgage?

There is no easy answer and the time will vary considerably from case to case. However, we have the following approximate time goals for your application, assuming it is sent online (add two or three extra days if sent by post):

1. Within two days of submitting your full application the lender should have started processing the case;
2. After five days they should have instructed the valuation;
3. Within a week we should know the result of the valuation;
4. After two weeks they should have completed their assessment of your income and ID, and if the valuation was satisfactory, you should have received your Offer by this stage.
5. Post-offer the time to exchange and complete can vary a great deal, but as a rule a reasonable target would be exchanging four weeks after applying and completing two months after you first applied.

You can find more detailed time estimates in our section on the application and house buying process.

What identification is required for my mortgage application?

All mortgage lenders are now required to obtain proof of identity in accordance with the European Money-laundering Regulations. You will therefore be required to provide either an original or certified copy of one or more of the following items of identification for proof of name and address:

Name ID items

• Current signed passport
• Current UK photocard driving licence - either full or provisional (can accept photocard only, but do not accept paper counterpart on its own)
• Current full UK driving licence (old version)
• Current EU driving licence
• Benefit book or most recent original notification letter from the Benefits Agency confirming the right to benefits
• Most recent Inland Revenue tax notification such as tax assessment, statement of account, notice of coding. (Note P45s and P60s are not official inland revenue documents and are not therefore acceptable).
• For customers who are self-employed in the Construction Industry a tax exemption certification with photo (Forms C1S5, C1S6 or C1S4)
• Northern Ireland Electoral ID Card
• Blue disabled driver's pass
• EEA Member State identity card with photo

Address ID items

• Current UK photocard driving licence (if not already used for evidence of personal ID)
• Current full UK driving licence (old version), if not already used for evidence of personal ID
• Recent utility bill. Not more than 3 months old. NB Mobile phone bills are not acceptable.
• Certificate from a supplier of utilities issued within the last three months confirming the arrangements to pay for their services on pre-payment terms.
• Recent statement from a UK bank, building society containing current address
• The most recent original mortgage statement from a recognised lender
• Local authority tax bill (valid for the current year)
• Local council rent card or local authority tenancy agreement only
• Benefit book or most recent original notification letter from the Benefits Agency confirming the right to benefits (if not already used for evidence of name)
• Solicitor's letter confirming a recent house purchase or land registry confirmation. (Additional address ID also required in order to verify the previous address.)
• Most recent Inland Revenue tax notification such as tax assessment, statement of account, notice of coding. (Note P45s and P60s are not official inland revenue documents and are not therefore acceptable), if not already used for evidence of personal ID.

What if I have other debts?

Generally, mortgage lenders will take into account repayments on existing loans and credit cards when assessing an application for a mortgage and will adjust the amount they are prepared to offer as a mortgage loan accordingly.

What if I don't have a deposit?

We do offer the option of a 100% mortgage (or up to 120% in some circumstances). However, you should think carefully before taking out a mortgage where you are more vulnerable to the effects of a fall in property prices. The rates on 100% mortgages are generally higher than where there is a deposit of at least 5%.

What if interest rates rise?

Each Key Facts Illustration contains information showing how much more you would need to find for your monthly repayments, should interest rates increase by 1%. Information on 'what if interest rates rise' is available in the following Financial Services Authority leaflet:

mortgage_whatif.pdf [59KB]

What if I can't afford my repayments?

If you think that you are going to have a problem do not try to hide it; if it is a joint mortgage you should advise the other owner as soon as possible and see if you can find a remedy between you; if the problem is temporary you may prefer to rent out your share for a period of time, or your parents may be able to assist. If you cannot resolve the problem between you, advise the lender and share to buy of the problem as soon as possible.

The FSA has provided a leaflet with further help:

mortgage_cantpay.pdf [62KB]

How many people can apply for the share to buy joint mortgage between friends?

If you were to walk into a High Street branch of a bank or building society, you would probably find it difficult to complete an application form for more than two applicants. Our whole system is geared towards shared mortgages between groups of individuals, and as such, we can have up to four applicants on our application for a joint mortgage between friends. Use the links below for more information.

Valuation

What is a valuation?

All mortgage lenders will undertake a valuation of the property you want to buy. For many this is a legal obligation; for all of them it is a necessary step to confirm that the property you are buying is adequate 'security' for the loan – that is, they want to know if the property is worth what you are hoping to pay for it, since in the event of repossession, they would want to know that the property could be sold and the borrowed sum recovered.

What are the different types of valuation?

There are three principal types of valuation:

1. A standard/basic valuation: just that, a basic assessment of the property. This will not be a detailed examination and is principally to satisfy the lender that the property is suitable security for a mortgage. It is important to stress that this option is primarily for the lender’s benefit and while the lender will confirm to you whether the property has been valued satisfactorily, i.e. at the amount you have agreed to pay, most of them will not provide you with any further detail about the property.
2. A Home Buyer's Report: this is based on a more detailed inspection of the property and is designed to highlight key features of the property and indicate any faults, so that the purchaser can take an informed decision on whether to proceed with the purchase or whether to amend his offer accordingly. Normally, the report is conducted by the same surveyor who carries out the basic valuation. Thus, your lender should be able to arrange this option to happen at the same time as the valuation, potentially reducing the overall cost. Please note that where a basic valuation is free, as is the case with some lenders, you may want to consider taking advantage of this to arrange your own inspection with a recommended local surveyor, instead of going through the lender.
3. A Full Structural Survey: a comprehensive report on the property. A relatively expensive option but providing the most in depth report on the property of the three options. This is to be recommended where the property is of considerable age or unusual design or construction.

What is the typical cost of a valuation?

It varies from lender to lender. Some lenders have free valuations, though they may have higher product fees for taking out the mortgage; other lenders charge for a basic valuation with lower product fees; others will subsidise both the basic valuation and the Home Buyer's Report. To give an example of the difference, for a £200,000 property Nationwide charges £280 for a basic valuation and £495 for a Home Buyer's Report.

Which valuation type is best?

As always, the answer will depend on your own individual circumstances but the Royal Institute of Chartered Surveyors recommends that home buyers at least consider the option of a Home Buyer’s Report. After all, compared with the cost of a property an extra £200 for a Home Buyer’s Report is not a great deal for the peace of mind of having it checked by an expert. That said, if you have a friend or family member who has the expertise to survey the property, or are buying a brand new property still covered by a builder’s guarantee, you may feel that a basic valuation is adequate.

What happens if the valuer finds problems with the property?

If the valuation is not entirely satisfactory in the lender's point of view, one of the following scenarios may occur:

1. Larger deposit required – some lenders may decide that they will lend on the property but only with a lower 'loan to value' (i.e. bigger deposit)
2. Downgrade – the property has been valued at a lower price than offered. In this case, the purchaser will either have to raise the difference through means other than the mortgage or negotiate with the vendor. We would stress that in these circumstances the first port of call is to see if the vendor will lower their price, since it is likely that other buyers with a mortgage will get a similar response.
3. Undertaking – the lender is happy to lend on the property but their mortgage offer will be subject to an undertaking. For example, if a property is found to have a superficial structural defect, the lender might require an undertaking that the issue be put right within a specific time limit (though this undertaking is largely taken on trust).
4. Retention – the lender retains part of the mortgage advance until a specific aspect of the property has been repaired or improved.
5. Unmortgagable property – the purchase of the property cannot proceed at all because the property is of a type that the lender will not lend on in any circumstances, due to lending policy (e.g. properties of unusual construction or above certain commercial premises).