Once you’ve made the decision to purchase your new home through the Shared Ownership scheme, there are a few steps you need to take to make sure your purchase goes without a hitch. We’ve pulled together a step-by-step guide to the whole Shared Ownership process to help you.
You also have the reassurance that our HomesHub team will be with you every step of the way, amd are only ever a phone call or email away at any time if you’re unsure about anything or have any questions at any time.
At this stage, we’d suggest seeking the advice of a qualified Financial Advisor (if you haven’t already), to get a professional opinion on your financial situation. Financial Advisors will be able to fully evaluate and stress-test your finances to make sure you’ll be able to afford both the mortgage repayments and rent payments on your new home, both now and in the future. These tests will take into account factors such as your current earnings, outgoings, loans and debts, your current credit history, and how much you have in savings to use as a deposit.
As part of the process we can put you in touch with a specialist Shared Ownership mortgage advisor who can determine the percentage you can buy. Remember, with the Shared Ownership scheme, you can purchase anywhere between 10-75% (scheme dependent) of the value of your home, and pay ‘rent’ on the part you don’t own. You’re now ready to begin the next stage – applying for a Mortgage in Principle.
Just like with a traditional property purchase, you’ll have to apply for a Mortgage in Principle from your mortgage lender. This is like a mini-application where the bank or building society checks your finances (salaries, outgoings, debts and credit history) in detail, to decide whether they will be willing to lend you enough to purchase your chosen shares in your home.
The Mortgage in Principle is not as strenuous as the full application – and some lenders only leave a ‘soft’ footprint on your credit file while they’re assessing your finances – but this is a necessary step in your homeowner journey to show you have a lender in place who is willing to lend you the required amount.
Your Financial Advisor or Mortgage Advisor can do this for you on your behalf. However, it’s worth keeping in mind that Mortgages in Principle – by their very nature – are not concrete; they are a provisional confirmation that your lender will give you the amount you’ve requested if all the information you have provided about your finances is true and accurate when you submit the full application.
Lenders do have the right to withdraw their Mortgage in Principle or change the amount they’re willing to lend at any time, but this is rare and is more likely to happen if any of the information you have provided is incorrect. Your financial professional will be able to talk through the process in more detail if you’re unsure, or you can speak to a member of our Homeshub team.
Now you know which home you want to buy and you know how much you can afford, you can start the reservation process.
We will use your Mortgage in Principle as evidence that you’re in a position to get the necessary funds to purchase the property, and we’re happy to proceed with the sale. You’ll receive an offer letter from us which confirms in writing the percentage of your property you’ll be purchasing, based on the value that your mortgage lender has provisionally agreed to lend you.
You’ll be asked to pay a non-refundable reservation fee of £250 to secure your future home – you can pay over the phone with a credit/debit card or cheque, but on the payment of the reservation fee we’ll take your property off the market.
From the day you pay your reservation fee on your perfect home, we’ll ask you to fill out and send back a reservation form within 7 days, which will give us the details of the solicitor and mortgage lender you’re intending to use.
Your Financial Advisor or Mortgage Advisor will guide you through this process.
During the full application process, your lender will do thorough checks on every aspect of your application (including your salary, your outgoings and your credit history), so it’s a good idea to be completely honest and declare everything upfront. This will give you the best chance of being accepted for the full amount you applied for on your Mortgage in Principle.
When the full application comes back, you’ll find out how much you’re officially able to borrow – the lender reserves the right to offer you what they think you’re able to pay back, so this amount could be more or less than you originally thought. If this is the case, your Financial Advisor will be there to advise you of what percentage share you can purchase with the funds available.
Our HomesHub colleagues will also be on hand to discuss any changes to your mortgage offer or any questions you have at this stage.
As with any property purchase, your mortgage lender will want a concrete guarantee that your home is worth what they are prepared to lend against. They will conduct a thorough mortgage valuation to make sure your home has been valued fairly, and is in line with current market values.
Don’t worry, at this stage you don’t have to do anything – we will meet the valuer at your property and walk them through the property, answering any questions they may have on your behalf. Also, it’s not unusual for solicitors to want to carry out searches of their own, looking into things that could affect the value or the purchase of your home, for example local, environmental, water and drainage searches. Not only does this give you more information about your future home, but it also gives the solicitor the opportunity to flag up any potential issues that may require further investigation.
Don’t worry – it is standard procedure for both the mortgage lender and your solicitor to look into the property you’re about to buy. Remember, everyone’s working on your behalf to make sure the property is right for you. Again, we’re here if you’re concerned about anything or if you’d like more clarification on anything.
Once your mortgage lender and solicitor have conducted their investigations and are happy to proceed, they will then decide a date to exchange contracts. The timescale between exchange and completion can be anywhere from less than 24 hours to a few weeks depending on your position and how quickly you’re able to move.
At this point, you then transfer over your deposit to your solicitor, who will release the fees to us upon legal completion. You will receive a copy of your lease to look over. Your solicitor will have also received a copy so they can explain anything you’re not sure of, but this document will contain all of the information relating to your new home, including what percentage you will own and how much the rental payments will be on the share of your home you don’t currently own.
If you are happy with everything on the lease, you’ll need to sign and return it, along with a Direct Debit mandate for HomesHub to take the rental payments every month for the share of your home you don’t own. While we’re waiting for legal completion we’ll require payment of the first month’s rent on your property (as per the lease you signed and returned to us), as well as the service charge, which is also documented in your lease.
Now the hard bit’s done, you just have to sit back, relax, and wait for your property to complete!
Your solicitor may well get in touch in the weeks and days leading up to your legal completion date with updates and any other information they need from you, but your purchase is in their hands while you’re waiting to get the keys to your perfect home.
Why not use this time to plan your move to make sure that you’re ready when the time comes?
Our handy checklist of things you can do to make sure your move will go without a hitch includes:
Remember, our HomesHub team will be here to help whenever you need us, so don’t be afraid to get in touch with us while you’re waiting for your home to complete.
We will be in touch shortly after you have officially moved into your new property to show you everything you need to know about your home, including how the appliances work and taking all necessary meter readings.
It’s an exciting time for you as you start a new chapter of your life as a homeowner.
We know the time may come when you’re ready to take the next step and own a larger percentage of your home – this is called ‘staircasing', and you can do this at any time as and when you can afford to. You can find out more about staircasing here.
Enjoy your new home and don’t hesitate to contact our HomesHub team should you need to check or ask anything.
