Share to Buy Expert Sessions: Your questions about mortgages

If you’re looking for a Shared Ownership mortgage, you may wish to check out our free mortgage comparison tool.

There is no minimum income to qualify for a mortgage, however your income will need to be sufficient to show that you will will be able to maintain the costs of purchasing the property, based on an affordability calculation used by the mortgage lender. The calculations used by mortgage lenders are not all the same and therefore different lenders may offer different loan amounts based on the same salary.

Response from Censeo Financial – Different lenders have different rules. A very few will accept based on a signed contract, some will accept after you have started with your new employer (even if it is your first), some will want to wait until you have received your first pay slip and some will want to know you are out of probation.

For more FAQs about income and employment status, visit our affordability page.

Response from Censeo Financial – This will depend on how long you have been earning overtime income and what proportion of your income is made up of overtime. Different lenders have different rules on overtime and many may ask for up to a year’s proof.

For more FAQs about income and employment status, visit our affordability page.

You can find out more about Shared Ownership mortgage here.

Check out the full list of documentation required for a mortgage application here. 

Response from Censeo Financial – There’s lots of various criteria that could mean you would be rejected. It is your adviser’s job to look into your situation in enough detail to ensure that they place you with a lender that will accept your application.

Any unusual factors in your situation will most likely reduce the number of lenders that would accept your application, which may mean you don’t have access to the very best rate, but your adviser will let you know if this is the case. However, no matter how well the adviser has done their job, the most common stage that a lender will decline is when the credit score is completed.

Check out the paperwork and documentation you would require when applying for a mortgage.

Response from Censeo Financial – That is almost impossible to answer as different credit score companies will give you a different score. Lenders do not take just the figure itself; they will look at many factors to score you, one of which will be the credit score value

Response from L&Q – We would recommend speaking to an independent mortgage advisor who can assess your case and inform you on what budget you are working with which can help you in your search for a home. Credit score is taken into consideration and you’ll get a better understanding of this during your assessment.

Response from Censeo Financial – It is not important in regards to whether you can get a mortgage, but could make a difference to the credit score. For that reason it is very important to make sure all your accounts and credit are in your current address, as well as your driving licence. You should also be on the electoral role at your current address and having your name on the council tax is also helpful.

In assessing affordability they will take no account of the joint purchaser’s income or any financial contribution that they may make. It is possible that the mortgage lender will reduce the amount of loan on the basis that the applicant for the mortgage is financially supporting the joint purchaser.

Response from Censeo Financial – It would not mean you were necessarily declined by all lenders, but it is likely that you’ll be required to pay a higher rate of interest.

As Shared Ownership homes are usually grant funded, the relevant housing provider would need to be able to confirm that you meet the eligibility requirements and are unable to otherwise purchase a property on the open market. Therefore, they may require you to obtain a mortgage, albeit small, as proof of this.

You may wish to contact the firms on Share to Buy’s Mortgage Broker Panel.

Response from Censeo Financial – It is not essential to get a Mortgage in Principle before viewing a house, but it does make sense to do so. A Decision in Principle checks affordability but the really important part of the DIP is the credit score.

If there is anything in your recent financial past that would stop you being able to buy, then you would not find yourself having fallen in love with a property, and had an offer accepted, only to find that you cannot buy it. This is true regardless of whether is a Shared Ownership property or not.

Find out more about Agreements in Principle here.

This can vary considerably between housing associations and whether you are buying a new build property or a resale home. With a new property you would normally expect to receive the memorandum within 10 working days. Some mortgage lenders will not accept a mortgage application unless it the memorandum is submitted with the application, while other lenders will want a copy before issuing a mortgage offer.

You can choose to use the services of a mortgage broker when purchasing a Shared Ownership home but this is not a requirement.

No. While most housing providers will have a panel of mortgage brokers that they can recommend to you, you do not have to use an advisor offered by the seller. However, we would suggest you appoint a specialist broker who has experience in Shared Ownership mortgages.

You may wish to check out Share to Buy’s Solicitor and Conveyancer Panel.

You can check out Share to Buy’s Mortgage Broker Panel and our Solicitors & Conveyancing Panel to find the details of firms who have experience in all aspects of Shared Ownership.

For more information about the process of buying a home, you can check out our step by step guide to buying a Shared Ownership property.

There can be a considerable variation in fees charged by mortgage brokers. Some do not charge a fee at all, others will charge for a percentage of the mortgage loan or a fixed amount. Mortgage brokers are required to let you know their fees in advance, so it is worth phoning a few for quotes.

Response from L&Q – A qualified mortgage broker is essentially a financial advisor that specialises in mortgages only. They ensure you find the right mortgage with rates that suit your budget. Their expert knowledge of the housing market means they can identify the best lenders and mortgage deals out there. Mortgage brokers have a duty of care towards you, meaning they must be able to justify any recommendations they make.

Here are a few factors that are taken into consideration when recommending a suitable deal for you:

• The size of your deposit
• Your monthly repayment preferences
• Interest rates
• Personal information such as your credit history and outgoings

This information helps them to see what mortgage offers you’ll be eligible for and how much you’ll be able to borrow.

An Independent Financial Advisor (IFA) will recommend several products. They can access the whole of the financial market in order to match the best product to your individual situation. They will give you impartial, unrestricted advice that considers every financial product on the relevant market.

An IFA will have knowledge of all financial areas, including investments, savings, insurance, pensions, tax planning and family estate management.

An IFA will do much more than simply tell you where to put your money. The whole point of advice is to make your money work for you and help you achieve your goals in life. So, a good adviser will look at your circumstances, from your current situation to your medium and long-term future, to help you decide upon the best action to take.

Response from Censeo Financial – If you are eligible and you have the affordability, then there is no difference in difficulty between obtaining a mortgage on a Shared Ownership home or a Help to Buy property

Find out about the difference between Shared Ownership and Help to Buy here.

Response from Censeo Financial – No, the mortgage can only go towards the purchase of the property itself.

Find out more about Stamp Duty and the costs of buying a Shared Ownership home here.

Response from Censeo Financial – The minimum deposit is 5% of the share that you are purchasing, but reaching a 10% deposit significantly reduces the interest rate that you will be offered. On top of that you will need money for a solicitor (usually between £1,500-£2,000). There will most likely be fees for your mortgage adviser too (up to £500) and possibly for a valuation to be completed.

Find out more about the costs associated with buying a Shared Ownership home.