The Shared Ownership Mortgage Application and House Buying Process

Step-by-step - our approach

While there is more to shared ownership than a standard mortgage application, many of the stages are the same. The big difference is the initial process of being accepted by a housing association and if you require information on the eligibility stage you should contact your regional homebuy agent (read our shared ownership basics page for more information on homebuy agents and getting started with shared ownership).

In this section, we assume that you have had your eligibility for a shared ownership/affordable housing scheme confirmed by a housing association and are now ready to apply for a mortgage and purchase a property. Please note: this section relates to buying a property with a shared ownership scheme such as part-buy/part-rent from a housing association; click here for information on the house buying process for an open market outright purchase.

The application timeline

1. Agreement in principle

In order for a housing association to confirm to you their offer of a shared ownership property, they will generally require confirmation that you have an 'agreement in principle'. This is sometimes called a mortgage promise or offer in principle and is an agreement from a mortgage lender that they will lend you a specified sum for property purchase, on the condition that the property is satisfactory as security for the mortgage and provided that you are able to verify your income and satisfy any other conditions. If you pass an agreement in principle application with the share to buy mortgage team, we will provide you with the necessary confirmation.

To apply for an agreement in principle, you simply go to the agreement in principle page and then answer some personal questions for each applicant: income, credit commitments, employment etc. On receipt of this information, we will NOT undertake a credit check but will issue you with detailed illustrations for products that you can apply for. If you like one of the products, you can then request an agreement in principle credit check from that particular lender.

Time: if you apply for an agreement in principle we will aim to reply with an illustration within 24 hours from which you can make your mortgage choice, but it will take longer where we have a high volume of applications and we will prioritise applications according to those that are most urgent. Once you make your mortgage choice and request a decision from a lender we will do our best to obtain a decision as quickly as possible but running the credit check can take anything from half an hour to 48 hours, depending on the lender concerned.

2. Appoint a Solicitor

Once you have been formally offered a property and are ready to apply in full, you will need to appoint a solicitor, though ideally you would instruct them not to undertake any work for which non-refundable fees will be billed until the application is well underway (e.g. after you receive a positive valuation of the property). The solicitor is responsible for important aspects of the property purchase, known as 'conveyancing'. This process includes:

• Legal checks (e.g. 'investigation of title', which proves whether the vendor has the right to sell the property).
• Advising you, the purchaser(s), on issues arising in the purchase process.
• Dealing with the various financial and contractual issues, such as paying stamp duty and executing the mortgage documentation.

While you may appoint any firm of solicitors to represent you, we also have partner firms of solicitors who have considerable experience in shared ownership and charge competitive rates. We will provide details of these firms together with any detailed mortgage illustrations that we send you.

Time: If you use one of our partner firms, there is a box to indicate this on the application and we will instruct them within 24 hours of receipt of a full mortgage application.

3. Full mortgage application

Once a housing association offers you a specific property you will need to submit a full mortgage application. The great benefit of submitting a full application as soon as possible after being offered the property is that this reserves the rate – bearing in mind that all products, and particularly competitive ones, can be withdrawn with little or no notice. In order to apply in full:

• If you have already obtained an agreement in principle from a lender you simply log back in to your agreement in principle application on our server and you will see that it has automatically been converted to a full application (we will provide you with log-in details to access the application). Therefore, all you have to do is answer the remaining questions for the full application (details of the property, your solicitor etc) and on completion this will be submitted to the lender as a full application. Of course, before submitting the full application on your behalf, we will check that the product you originally wanted to apply for is available and that it remains a competitive option for you.
• If you have not yet obtained an agreement in principle, you should do so as soon as you are offered a property that you wish to purchase. If you pass agreement in principle you can then continue to a full application as outlined in the previous bullet point. On receipt of your shared ownership mortgage application from us, the lender will assess your income proof and obtain any mortgage fees from you. When these fees are paid (usually by cheque or card) and your income proof is agreed as being satisfactory, at that point a valuation of the property will be instructed.

Time: on receipt of your full application we will check it and get back to you if we have any queries. Please note that if it is an unusual property type it is worth checking with us prior to submission that this is not likely to cause problems - typically, applications for properties above commercial premises, in tower blocks and those of unusual construction can cause problems. We will normally submit your full application to the lender instantaneously, depending on whether it is by electronic or paper-based means. You should allow up to 48 hours for a lender to start processing an electronically submitted application and up to five days for posted applications.

NB: your application is likely to require the payment of up-front mortgage or valuation fees, though some of these can be added to the loan on completion. Typically, valuation fees are paid up front and are non-refundable after the valuation has happened whilst most product fees can be added to the loan (but note that some housing associations do not allow this).

4. Valuation/Survey of the Property

A valuation is required by the lender to verify that the property is adequate security for the mortgage. There are three principal types of valuation:

• A standard valuation: just that, a basic assessment of the property and generally all that is required for a brand new property (as is the case with many shared ownership applications). A standard valuation should suffice for new build homebuy because the property is unlikely to have defects in it and if it did, it should be covered by an NHBC or other such builder’s guarantee for a period of 10 years. This valuation will not be a detailed examination and is principally to satisfy the lender that the property is suitable security for a mortgage (i.e. that the property is worth what you are seeking to pay for).
• 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. This is more expensive than a basic valuation but also provides you with much more detailed information about the property which you may be able to use to go back to the lender and renegotiate the price or terms. This option is recommended by the Royal Institute for Chartered Surveyors. It is important to stress that a Home Buyer's Report combines both a basic valuation and a more detailed inspection for your benefit and is generally arranged through the lender; it's just that the same person carries out both inspections simultaneously so as to make the overall cost of the detailed survey more economical, assuming that you would have to pay for the basic valuation anyway.
• 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. Although some lenders will arrange a full structural survey, in most cases, you would first have the standard valuation from the lender and if it passed you would instruct a local surveyor at your own discretion to conduct the full inspection of the property.

In deciding which option to choose, bear in mind that most shared ownership applications are for new build properties in which case a standard valuation is generally regarded as sufficient, but if the property is more than 10 years old or if you have any concern over its condition you should give serious consideration to a more detailed inspection. Click here for an important FAQ: what happens if the valuer finds problems with the property?

Time: the valuation should be instructed within two or three days of the lender receiving your full application and the payment of any fees thereof, but in practice it can take a lot longer if there are delays in getting paperwork etc. In total, you should allow up to seven days from the day you submit the full application electronically or ten days if submitted by post for the valuation to be carried out and up to two weeks before you know the result.

5. Verification of identity and income

On submitting your application you will be required to provide verification of your both your income and your identity. This will be sent to us and when we are satisfied with it, we will forward your proofs to the lender as certified copies and return any originals to you. When both the property and proofs have been assessed satisfactorily, you will receive a mortgage offer (see next step). The lenders need to verify two points:

• Your income: This will usually be verified by original or certified copies of P60s and payslips, or alternatively, an employer's reference where these cannot be obtained or an accountant's reference for self-employed applicants.
• Your identity: This will be verified by original or certified copies of documents confirming your identity (usually photo page of your passport or driving license); and original or certified copies of documents confirming your address (typically the address page of a bank statement, council tax bill, non-mobile phone bill or other utility bill from the last three months).

Time: it usually takes the lender 3-5 working days from the time they commence processing your application to verify your proof of income, but again, it can take a lot longer for complex cases or where the lender is experiencing a backlog. On occasion the lender may query payslips or other points and may request an employer's reference which can delay the process slightly.

6. Offer of advance from the mortgage lender

The 'Offer' is the most important milestone of the mortgage application process because you now have confirmation that the mortgage loan will be made available and your solicitor can proceed with the exchange of contracts leading to your purchase of the property. When the lender has assessed both the property and your proof of income and identity, and is satisfied with all, they will proceed to issuing you with an Offer document that will also be copied to ourselves and your solicitor. The Offer will set out the terms under which the mortgage is to be offered to you. Once the Offer is issued, we will send you illustrations for insurance to protect your mortgage.

Time: from the moment the lender starts processing your full application, we will aim to have an Offer produced for your case within two weeks. However, the Offer can sometimes take considerably longer to be issued for a number of reasons (e.g. workload; delays in obtaining paperwork etc) but we will always do our best to expedite the application.

7. Final Stages of the Purchase

When you have received an Offer of advance from the mortgage company, the remaining stages of the purchase are predominantly in the hands of your solicitor. The solicitor will finalise the arrangements with the housing association and arrange payment from the mortgage lender to the housing association and ensure that all the paperwork is completed to enable you take possession of the property.

Time: the time from Offer to completion can vary enormously, particularly with new build properties where several months can elapse between applying for the mortgage and the property being ready for occupation. For a straightforward purchase it would not be unreasonable to assume an overall target of two to three months from commencing a full application to completing the purchase.