When it comes to mortgage deposits, it’s important to be informed. One of the first things to know is that the higher your deposit amount, the less you have to borrow to cover the cost of owning a home.

You may also get better interest rates and more favourable terms if your deposit is a decent amount.

However, saving as you balance other financial needs like living costs or rent can be challenging and tedious, making heft mortgage deposits difficult to achieve.

Fortunately, various government schemes and non-government options in the UK can help with mortgage deposits as you save up for a home.

Read on to learn about the plans and options available to help boost your savings and make your mortgage deposit as big as possible.

Government Mortgage Schemes

Help To Buy: Equity Loan

The Help To Buy Equity Loan is a shared equity scheme only available in England for first-time buyers and current homeowners who wish to move.

You can only use this scheme for newly built homes with a maximum value of £600,000.

To qualify, you need to have a minimum 5% deposit saved. The government will give you an equity loan of up to 20% of the property’s value. Add this to your 5%, and you’ll only need to secure a 75% mortgage.

The loan will be interest-free for the first five years. A 1.75% fee is payable from year six, and it rises annually by inflation plus 1%.

The repayments are interest-only, and you can repay the loan anytime or when you sell the property.

London features high property prices. The government increases the loan’s upper limit to 40% of the property value if you purchase in London.

This means that after you add the 5% you’ve saved, you’ll only need to take out a 55% mortgage to cover the rest.

Related reading: 

• Mortgage for concessionary purchase.
• Family assisted mortgages explained.

Shared Ownership

The Shared Ownership scheme is available in England only, and it allows you to buy a share of your home if you can’t afford a 100% mortgage.

You can buy between 10% to 75% of the home’s value and pay the remaining share as rent. You’re also allowed to buy more shares later on when you can afford to with a gradual staircasing model.

Properties in Shared Ownership are always leasehold, and you can buy a newly built home or an existing one through resale programmes from housing associations.

You can take out a mortgage to pay for your share of the home’s purchase price or fund it with your savings.

Your household earnings must be £80,000 a year or less, and you have to have saved a minimum of 5% of the property’s value to buy a home through shared ownership.

If you’re in London, household earnings must be £90,000 a year or less. You can also qualify if you’re a first-time owner, used to own a home but can’t now, or are a shared owner wishing to move.

Lifetime Individual Savings Account (LISA)

A LISA can be opened by anyone aged between 18 and 39 years, and you can use it to buy your first home provided it costs £450,000 or less.

You must make your first payment into a LISA before you turn 40, and you can put in up to £4,000 annually until you turn 50.

The government will add a 25% bonus on whatever you save with a maximum of £1,000 per year if you save the full £4,000. Additionally, if you’re buying a home with someone else, you can both take advantage of separate LISAs.

Keep in mind that there’s a penalty if you take money out of a LISA and fail to put it towards a home deposit.

Only first-time buyers can use LISAs to buy a home. This means you can’t use LISAs to purchase a home if you own or have owned a home in the UK or anywhere else in the world.

However, you can still use LISAs to save for later life. You also have to ensure you use a traditional repayments mortgage and buy a home you plan to live in or occupy. LISAs are not eligible for buying holiday homes or homes you want to rent out.

Recommended: Learn more about the different types of mortgages and the fees involved in buying a home.

Right To Buy

The Right to Buy scheme is available if you’re a housing association or council house tenant in England or Northern Ireland.

It can help with your mortgage deposit by allowing you to buy the property at a discount or less than its market rate.

To qualify, you must have been a secure tenant for at least three years. The discount you get on the property’s price will depend on the length of your tenancy, the property type, and its market value.

If you live in an eligible house in England, the discount will be between 32% and 60%, depending on your tenancy length. For flats, you can get a discount between 44% and 70%.

The maximum Right to Buy discount you can get in England is £84,200, £112,300 in London, and £24,000 in Northern Ireland. You’ll not have a right to buy if you’re under the threat of eviction, have large debts, are bankrupt, or your home is for the disabled or elderly.

Keep in mind that you have to use the home you want to buy as your new home, and if you sell within five years, you’ll have to repay the total discount or some of it plus a share of the profits.

Right To Acquire

The Right to Acquire scheme is available in England if you’re a housing association tenant who doesn’t qualify for a Right to Buy option. You must have at least three years of tenancy and purchase the property as your main home.

The discounts for the Right to Acquire scheme are usually lower than for the right to buy and typically range between £9,000 and £16,000.

The house must have been built by public funds or taken over from a local council, and your landlord must be a member of a housing association or be on the social housing providers register.

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

• Family deposit mortgages. 
• Shared ownership mortgages.
• Gifted deposit mortgages.

Other Schemes

Guarantor Mortgage Schemes

In this scheme, a family member or friend can use their home or money as security or deposit on your behalf. The guarantor has to own their property or have enough equity to satisfy the lender to qualify. Proof that they can cover your payments when you default and good credit is also needed.

Many lenders accept guarantor mortgage arrangements, and some may even allow taking a 100% mortgage with a guarantor. However, it’s better to use some of your savings if you want the best rates.

Bank Schemes

Some lenders and banks offer special mortgages aimed at helping first-time homeowners who are short of funds. Some even allow relatives to leverage their savings to help you buy a home.

You may be required to contribute a minimum of 5% of the property value while your relative provides a 10% deposit.

Remember, each lender will have different requirements on the minimum deposit together with different rates and terms. However, it’s a viable option to consider if you have a friend or relative willing to help contribute towards your mortgage deposit.

Help With a Mortgage Deposit Final Thoughts

The above schemes are intended to help boost your deposit and enable you to get competitive rates and terms from various lenders. A mortgage adviser can help you find the most suitable deal for your situation.

First Time Buyer – Ready to get on the property ladder?

If you’re ready to take the leap, we’re ready to help you with your first time buyer mortgage application.

As a first time buyer, it’s natural to have a lot of questions. Ask away, one of our friendly advisors would love to talk things through with you.

Call us today on 03330 90 60 30 or complete our quick and easy First Time Buyer Mortgage Application.

Mortgage lenders are continuously adapting to the challenges facing the property market including increased property prices, which have led to the creation of various government schemes to assist home buyers.

Lenders have also acknowledged that in many cases family members provide assistance by helping the younger generation get into the housing ladder and therefore some lenders have different family assisted mortgages to assist this.

Throughout this article, we will explore some of the mortgages available including their criteria and purpose.

What is a family assisted Mortgage?

A mortgage product enabling borrowing for the purpose of purchasing a property with the help of family members.

The mortgage enables the utilisation of family savings to enable the purchase of a house and can be suitable either for first time buyers or existing homeowners looking to move.

Check Today's Best Rates >

How Much can be Borrowed via a Family Assisted Mortgage?

As with most financial products, the terms offered will depend on many factors including the applicant’s financial background. If there are two applicants, both salaries are included within the calculations.

Related quick help guides:

• How long does a mortgage application take to approve? 
• Mortgage for concessionary purchase.
• Family assisted mortgages explained.
• Different types of mortgages.

What are the Typical Mortgage Lending Rates?

The mortgage interest rates offered will usually depend on the product and applicants’ credit history as well as the market conditions, however, there will also be some differences between lenders and therefore it is always useful to shop around to compare lending rates.

Currently family assisted mortgage rates are typically between 2% and 4%. The rates are generally higher than standard mortgage interest rates as the lenders ultimately are providing 100% loan to property value products that carry more risk.

Differences between Family Assisted Mortgage Terms and Conditions

In addition to differences in interest rates between lenders, terms and conditions can also vary. For example, Halifax have been known to offer a reduced duration of time that family members would need to secure their savings to the mortgage for, down to three years compared with the usual five.

This may be useful in some personal circumstances although the mortgage repayments tend to be higher to ensure that enough provision is being made to cover the savings over the shorter term.

Wondering how much buying a house costs? Read all about the fees involved in buying a home.

Some lenders will only offer assisted mortgages to existing mortgage customers, such as Nationwide. In this case, savings are not required to secure a family mortgage as the equity is used from the family member’s home instead.

Check Today's Best Rates >

The Post Office currently offer similar family mortgage terms to Nationwide named a ‘family link mortgage’, however, they are slightly stricter in the sense that the helper must be a family member rather than a friend, and also, that the helper’s property must be mortgage-free.

The Post Office does not differ from the five-year minimum term, and also prescribe that the mortgage applicant must earn a minimum of £20,000 salary to be eligible for their family link mortgage product.

Lloyds currently offer a ‘lend a hand mortgage’ product which provides slightly more flexibility than its competitors. They can offer the reduced fixed-term option of locking away savings for three years instead of five, as well as providing an option to the applicant of putting down a 5% deposit in addition.

Also, Lloyds appear very generous with incentives offered to the helper, providing a 10% reward as well as interest payable for securing the savings linked to the mortgage product.

In addition to the terms mentioned above, some lenders may also provide other incentives to encourage applicants to sway towards borrowing with them. The incentives could include cashback or a slight reduction in rates offered depending on the circumstance of the relationship between the parties and the lender or the credit history of the applicant.

Types of First Time Buyer Mortgages

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

• Family deposit mortgages. 
• Shared ownership mortgages. 
• Gifted deposit mortgages. 

Family Assisted Mortgages Summary

There are many benefits of family assisted mortgages, including helping younger family members get onto the housing ladder without saving such large deposits that can otherwise be required for standard mortgage applications, however, there are considerations too such as locking away large sums of money for a set period of time.

Obviously, with all these types of mortgages, a lot of trust is required between all parties as either the savings or any additional property secured to the family mortgage are at risk should the loan repayments not be made.

Therefore other options may wish to be considered such as the use of a guarantor for a mortgage application, acting as the security for the lender.

Other traditional methods such as gifting a cash sum towards a deposit can also still be useful however in some circumstances inheritance tax may be applicable.

Each case is unique depending on the individual circumstances and therefore it’s is often worth seeking specialist financial advice before committing to any decision or the financial avenue.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Although there are many challenges faced by first time buyers, there are also more options than ever before to help enable the first steps onto the property ladder from government assistance schemes to an increased range of financial products enabling help from friends and family members in different ways.

Mortgage lenders are continuously adapting to the property market conditions, offering various methods of borrowing finances to purchase a property.

This guide will explore everything in connection with concessionary purchases including the finance options available.

What is Concessionary Purchase?

A concessionary purchase occurs when a property is purchased for less than the market value. Another term used to describe this scenario is below market value or BMV.

Therefore, a concessionary mortgage is a financial product used to purchase a property at less than the market value.

There may be a variety of reasons why a property would be sold at less than the market value, for example;

• Discounts may be offered due to the property transaction due to take place between family members.
• There may be an existing relationship between the vendor and purchaser such as previous landlord or employer and therefore a discount may be offered.

Check Today's Best Rates >

Benefits of Concessionary Purchasing

Purchasing property from family has a variety of benefits including family providing assistance with financing property, as well inside knowledge of the property history, reducing surprises than can occur with property ownership such as broken boilers or planning permission issues.

Also, this option provides a method of retaining property within the family for sentimental reasons.

How do Concessionary Mortgages Work?

Instead of alternative methods such as a family assisted/guarantor mortgage or cash gifts from relatives to help towards deposits, a concessionary purchase could be undertaken by a parent, for example, offering to sell their property to their child at a reduced rate.
The difference between the market value and the reduced price, therefore, acts as a gifted equity deposit.

Some lenders will be willing to offer mortgages at 100% of the property value however, others will also require a deposit of between 5% and 10% of the property value. Most mortgage terms offered will depend on the mortgage applicants’ credit record as well as other factors such as market conditions and competitiveness between lenders.

Interest rates on concessionary mortgages

Concessionary mortgage interest rates often do not differ from interest rates on standard market-wide mortgages, however alike most financial products, the actual rates offered are usually dependent on the applicants’ credit history.

In addition, the rates offered on a concessionary mortgage can vary due to the following factors:

• The level of discount that the property was purchased for against the market value.
• If an additional deposit is being put down towards the mortgage.
• Affordability factors of the applicants.

Check Today's Best Rates >

Buying a house from a family member at a discount

Some lenders may require that the property transaction related to a concessionary mortgage is between close family members only such as between parents, grandparents and children. Whilst other lenders may have more relaxed definitions of the family members to include Aunts and Uncles.

There are other factors to consider when reviewing methods of purchasing a property with the help of family members. For example, some lenders will not allow for the parents to live within the property once it is sold, and therefore funding additional property for the parents to reside within then becomes a supplementary concern.

Related quick help guides:

• How long does a mortgage application take to approve? 
• Mortgage for concessionary purchase.
• Family assisted mortgages explained.
• Different types of mortgages.

Should a lender allow parents to remain living within the property that has been sold, often a condition is added to the mortgage that the parents must sign a ‘waiver of rights’ which, if their circumstances change, later on, it may leave them in a vulnerable position?

Therefore, it is strongly advised that all parties seek both independent financial and legal advice before committing to a concessionary property transaction.

Other Considerations in Relation to Concessionary Mortgages

Obviously, with all family-related transactions, a lot of trust is required between all parties concerned. It has been known that later on down the line following concessionary purchase issues have been raised regarding disputes over ownership and rights to the property.

Therefore, it is vital that the legal side of the property transactions are covered entirely, not leaving any doubt of the intent of the transaction.

It is worth noting that stamp duty works in the same way as standard property purchase and therefore this tax may be payable depending on the purchase value and the government rules and tax band levels at the time of purchase.

Check Today's Best Rates >

Concessionary Mortgages between Landlords and Tenants

After many years of living within a rented property, tenants may wish to purchase it, and in certain circumstances, landlords may be willing to accept such requests.

By transacting between known parties, there can be time and money saved but also reduced the stress involved as both intent and often affordability factors are more known of the purchasers/tenants and therefore property purchase chains are less complicated and less likely to breakdown.

Landlords can save money by not using estate agents, and therefore may be willing to sell the property to the tenants at a reduced rate. There are common conditions that landlords must meet to sell directly to tenants, at a below market value rate such as:

• Discounts usually should not exceed 10% of the property price.
• The tenants may be required to also pay a deposit.
• Tenants must have lived within the property for at least one year.

Wondering how much buying a house costs? Read all about the fees involved in buying a home.

However, some lenders may be more lenient regarding these conditions depending on other factors such as affordability and cash deposit level of the mortgage applicants.

Concessionary transactions between Landlords and Tenants are fairly rare and therefore there are fewer mortgages offered in this way, however, a mortgage advisor would be able to advise on the lenders that are most likely to offer such terms.

Check Today's Best Rates >

Types of First Time Buyer Mortgages

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

• Family deposit mortgages. 
• Shared ownership mortgages. 
• Gifted deposit mortgages. 

Concessionary Purchase Summary

There are many benefits of concessionary purchasing including family members providing financial assistance enabling the purchase of property, however, there are considerations to review such as the legal position of the parents involved as well as where they will live once the transaction is complete.

Each case is individual and therefore its is strongly advised that specialist financial advice is sought during the investigation stage before any decisions are made.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Is a Family Deposit mortgage an option?

So, as a First -time buyer who wants to own their own home, you’ve started house-hunting, but you are struggling to get that all-important deposit together.  What options do you have? One realistic option may be a family deposit mortgage.

That is of course if realistically you have family members who want to help you get that deposit together. Something you may need to check first before you go foot-first into this!

It’s different than a Gifted Deposit because they get the money back and in effect, you are getting a 100% mortgage on the property you are buying.

Not all family members are in the financial position to gift away thousands of pounds but if they do have savings themselves and they are comfortable with saving it with a mortgage lender using an alternative account and way of investment, they could still provide the help that you need on the understanding they get that money back.

Check Today's Best Rates >

What is a Family Deposit Mortgage?  

The principle of the Family Deposit Mortgage is quite simple, with the assistance of your family member(s), this means you could apply for a mortgage even if you haven’t managed to save any deposit yourself. Therefore, you can still get your all-important foot on the property ladder.

However, the criteria of the scheme differ from lender to lender and it is also worth considering that not all lenders actually offer this type of product.

The helper of the deposit provides their contribution which is held in a savings account with the lender and they earn interest on the money.

This needs to be held for a certain time set out by the lender and after that time period, they get their money back with interest.

With some lenders, the Family Deposit may have to be 10% and with some lenders, their criteria may be 20%.

1 lender may need the money to be held in a savings account for 3 years and another may require it to be held for 5 years.

The mortgage product you have will tend to be fixed for the duration of the time the helper’s money needs to be tied up.  So if it’s 5 years, you would have a 5 year fixed product.

A mortgage application can take some time to be approved, so make sure you are well prepared, which means ensuring you have your credit score meeting the requirements of your lender. Also, it’s a good idea to familiarise yourself with the fees involved when buying a property.

There are different types of mortgages too, some other common types of first-time buyer mortgages include the following:

• Shared ownership mortgages 
• Gifted deposit mortgages 

Things for the person providing the Family Deposit to consider.

The amount of deposit as a % of the property being purchased is set out by the lender and as already mentioned lenders have different requirements.  This money is invested in an account with the lender and interest will be earned at a certain rate.

Again, these rates of interest will differ depending on the lender.  What is really important is the person who is providing this deposit will be investing it for a set period of time and will not be able to withdraw this money before the end of that fixed agreement.

This is usually either 3 or 5 years, depending on the lender.

Very importantly, some lenders have restrictions on the amount of investment being returned or interest earned. i.e. there must not have been any missed mortgage payments for example.

The Person providing the deposit money should seek independent advice once they have the full terms of conditions from the lender regarding their investment.

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Do they have a legal interest in the property?

The property is owned by the borrower.  Only those that are named on the mortgage have any legal right over the property. The person who is assisting with the Family Deposit has no legal interest in the property.

Does the property I am buying affect a Family Deposit Mortgage?

In some scenarios yes it may do.  Some of the lenders offering these types of mortgages, for example, may not lend on new built properties.

Related reading? 

• Repayments on £80,000 mortgage. 
• Interest-only mortgages.
• Zero deposit mortgage.
• The first mortgage explained.
• What stops you getting a mortgage in the UK?

I have a family member that wants to help, what are the next steps?

This is where talking to an independent Mortgage Broker will certainly bring you added value and save you lots of time. We have access to over 90 lenders currently and the products that they offer differ from Lender to Lender.

As I have mentioned earlier on, Family Gifted Deposit mortgages are only offered by a handful of lenders and their criteria are different with each one.

We want to establish what your individual circumstances are, discuss with the person who wants to assist with the Family deposit mortgage how much they are happy to invest and for how long and then we will discuss the best options with you.

It is a regulatory requirement that we get from you all the information we need in order to give you the best advice possible.

This means we will go through your personal details, income, credit commitments, monthly outgoings, check affordability and also consider your overall creditworthiness.

Our expertise will mean we will ensure we place you with the right lender for your individual circumstances.

Check Today's Best Rates >

What is a Shared Ownership Property?

When searching the property websites, there will be Shared Ownership properties which catch your eye as they are often very reasonably priced compared to similar properties within that area.

Read that property advert in a little more detail and in fact you see in the write-up that the price advertised on the property is for “Shared Ownership” and the sale price will be for a percentage share. Usually between 25% and 75%.

The remaining percentage will be owned by a housing association.  It’s a kind of somewhere in between buying and renting which appeals to some people who want to get on the property ladder.

The property may very well be a new build property where the developer is working in conjunction with a housing association and offering the Shared Ownership properties as a way of affordable housing.

There are also re-sale Shared Ownership properties, in other words, used or 2^nd hand properties.

Who can buy a Shared Ownership Property?

Shared Ownership properties are often attractive to people who may not be able to afford to buy a property in the usual way with a deposit and a mortgage and own the property outright.

You will still need a deposit though and I will go through this a little further on.

The Government set out guidelines for local housing associations as to who is eligible to purchase a Shared Ownership property. The current guidelines are as follows.

The Household income is £80,000 or less.  (This is different in London where this figure is £90,000 or less).  In addition to this earnings cap, the following also applies.

You are either a First Time Buyer or a current non home-owner who cannot afford to buy a new home in the standard way.

You are an existing shared owner.

If you are over 55 there is a slightly different scheme called the Older Persons Shared Ownership Scheme.  The difference with this scheme is the maximum percentage you can own of the property is set at 75%.

If you’re wondering how long a mortgage application takes to be approved, the answer is that it depends, you can improve your chances by ensuring you meet your lender’s credit score requirements.

It’s also a good idea to familiarise yourself with the different types of mortgages and the fees involved with buying property.

Types of First Time Buyer Mortgages

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

• Family deposit mortgages 
• Gifted deposit mortgages 

Check Today's Best Rates >

Can I buy a bigger percentage of the property?

Yes, you can! This is known as “Staircasing”. However, you will have needed to have had your Shared Ownership property for a specific amount of time before you can look to buy a further percentage.

This qualifying time period will be set out in the terms of your lease. If you want to buy an additional share in the property, the share value will be based on the current market value of the property.

Each time you want to buy a bigger share, you are likely to incur the cost of the valuation fee. Your mortgage requirements are likely to change also so you will need to get advice from your mortgage adviser on this.

Of course, one benefit of buying a bigger share is that your rent will reduce with the housing association.

If you get to the stage where you own 100% of the property, then you will have no rent to pay at all and you will be a fully-fledged homeowner!

Pros and Cons of Shared Ownership?

If you are fed up with renting or the prospect of owning your own home seems a million miles away, then it can help you get on the property ladder.

Also, as it is just a share of the property you will own, then your mortgage amount will be much smaller, your deposit amount is likely to also be smaller.

You do have the option to buy the property outright as I mentioned earlier by Staircasing, so as your financial position changes this can be something that is achievable in the future.

Although you do not own 100% of the property, you are responsible for the full maintenance costs of the property, whereas if you rented you are likely to have your landlord to deal with these.

As mentioned earlier the valuation fees incurred should you wish to increase your percentage share can be seen as a downfall.

The staircasing share will depend on the market value of your property at that time, which may mean it is beyond your affordability to buy that extra share.

The rent charged by the housing association can also mean, in addition to your mortgage payment – it could work out less attractive cost-wise as you initially thought.

 Check Today's Best Rates >

How does a Shared Ownership Mortgage work?

You will own a percentage of that property using your deposit and a mortgage to purchase it and you will pay rent to a housing association on the remaining amount.

The percentage share that you own is usually between 25% and 75%.

An example being:

• Property advertised £75,000 which is a 50% shared ownership property. (Full value of the property being £150,000).
• You have 10% deposit to put down (10% of your share price) £7,500
• Your mortgage borrowing amount is £67,500
• You will pay a monthly mortgage amount to your mortgage lender and in addition, you will pay a rent to the housing association.

It is worth noting, the rent can differ greatly on property to property and it is set out by the housing association. One of the first questions you should ask when considering a Shared Ownership property is the monthly cost of this rent.

Also, as the property is likely to be leasehold you will also need to know how much the ground rent and the cost of any service charges applicable.

How do I look into a Shared Ownership mortgage?

Not all lenders offer Shared Ownership Mortgages, so this is another area where a Mortgage Broker will offer added value and save you lots of time.

We will discuss your requirements and very early on in the process discuss your deposit, the percentage share you are looking to obtain a mortgage for and assess your affordability.

To accurately do this and to avoid disappointment further down the line we will need to include accurate costs such as rent, ground rent and any service charges so the more information you can obtain from the housing association the better as it helps us paint the clearest picture to the lender with the aim of getting your mortgage accepted.

These will all be included as monthly commitments and will form part of the affordability check.

There are some lenders that will require a larger deposit than others so this is certainly one key factor that we will look at to ensure we place you with the right lender for your individual circumstances.

Should you have any further questions about a shared ownership mortgage, please get in touch and we will do our best to help.

Check Today's Best Rates >

What is a Shared Ownership Property?

When searching the property websites, there will be Shared Ownership properties which catch your eye as they are often very reasonably priced compared to similar properties within that area.

Read that property advert in a little more detail and in fact you see in the write-up that the price advertised on the property is for “Shared Ownership” and the sale price will be for a percentage share. Usually between 25% and 75%.

The remaining percentage will be owned by a housing association.  It’s a kind of somewhere in between buying and renting which appeals to some people who want to get on the property ladder.

The property may very well be a new build property where the developer is working in conjunction with a housing association and offering the Shared Ownership properties as a way of affordable housing.  There are also re-sale Shared Ownership properties, in other words, used or 2^nd hand properties.

Who can buy a Shared Ownership Property?

Shared Ownership properties are often attractive to people who may not be able to afford to buy a property in the usual way with a deposit and a mortgage and own the property outright. You will still need a deposit though and I will go through this a little further on.

The Government set out guidelines for local housing associations as to who is eligible to purchase a Shared Ownership property. The current guidelines are as follows.

The Household income is £80,000 or less.  (This is different in London where this figure is £90,000 or less).  In addition to this earnings cap, the following also applies.

You are either a First Time Buyer or a current non home-owner who cannot afford to buy a new home in the standard way.

You are an existing shared owner.

If you are over 55 there is a slightly different scheme called the Older Persons Shared Ownership Scheme.  The difference with this scheme is the maximum percentage you can own of the property is set at 75%.

If you’re wondering how long a mortgage application takes to be approved, the answer is that it depends, you can improve your chances by ensuring you meet your lender’s credit score requirements.

It’s also a good idea to familiarise yourself with the different types of mortgages and the fees involved with buying property.

Types of First Time Buyer Mortgages

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

• Family deposit mortgages 
• Gifted deposit mortgages 

Check Today's Best Rates >

Can I buy a bigger percentage of the property?

Yes, you can! This is known as “Staircasing”. However, you will have needed to have had your Shared Ownership property for a specific amount of time before you can look to buy a further percentage.

This qualifying time period will be set out in the terms of your lease.  If you want to buy an additional share in the property, the share value will be based on the current market value of the property.  Each time you want to buy a bigger share, you are likely to incur the cost of the valuation fee.  Your mortgage requirements are likely to change also so you will need to get advice from your mortgage adviser on this.

Of course, one benefit of buying a bigger share is that your rent will reduce with the housing association.  If you get to the stage where you own 100% of the property, then you will have no rent to pay at all and you will be a fully-fledged homeowner!

Pros and Cons of Shared Ownership?

If you are fed up with renting or the prospect of owning your own home seems a million miles away, then it can help you get on the property ladder. Also, as it is just a share of the property you will own, then your mortgage amount will be much smaller, your deposit amount is likely to also be smaller.

You do have the option to buy the property outright as I mentioned earlier by Staircasing, so as your financial position changes this can be something that is achievable in the future.

Although you do not own 100% of the property, you are responsible for the full maintenance costs of the property, whereas if you rented you are likely to have your landlord to deal with these.  As mentioned earlier the valuation fees incurred should you wish to increase your percentage share can be seen as a downfall.

The staircasing share will depend on the market value of your property at that time, which may mean it is beyond your affordability to buy that extra share.  The rent charged by the housing association can also mean, in addition to your mortgage payment – it could work out less attractive cost-wise as you initially thought.

 Check Today's Best Rates >

How does a Shared Ownership Mortgage work?

You will own a percentage of that property using your deposit and a mortgage to purchase it and you will pay rent to a housing association on the remaining amount.  The percentage share that you own is usually between 25% and 75%.

An example being:

• Property advertised £75,000 which is a 50% shared ownership property. (Full value of the property being £150,000).
• You have 10% deposit to put down (10% of your share price) £7,500
• Your mortgage borrowing amount is £67,500
• You will pay a monthly mortgage amount to your mortgage lender and in addition, you will pay a rent to the housing association.

It is worth noting, the rent can differ greatly on property to property and it is set out by the housing association.  One of the first questions you should ask when considering a Shared Ownership property is the monthly cost of this rent.  Also, as the property is likely to be leasehold you will also need to know how much the ground rent and the cost of any service charges applicable.

How do I look into a Shared Ownership mortgage?

Not all lenders offer Shared Ownership Mortgages, so this is another area where a Mortgage Broker will offer added value and save you lots of time. We will discuss your requirements and very early on in the process discuss your deposit, the percentage share you are looking to obtain a mortgage for and assess your affordability.

To accurately do this and to avoid disappointment further down the line we will need to include accurate costs such as rent, ground rent and any service charges so the more information you can obtain from the housing association the better as it helps us paint the clearest picture to the lender with the aim of getting your mortgage accepted.

These will all be included as monthly commitments and will form part of the affordability check.  There are some lenders that will require a larger deposit than others so this is certainly one key factor that we will look at to ensure we place you with the right lender for your individual circumstances.

Should you have any further questions about a shared ownership mortgage, please get in touch and we will do our best to help.

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Why do we need to know where your deposit has come from?

As your Mortgage Broker we want to do our very best to get to know you, establish your mortgage needs and help you to take the next step on the property ladder.  To do this, we will go through your requirements, discuss your circumstances, and establish your ability to lend the money you need.

(you could start this journey by completing our simple form here) Part of this is us needing to know what your deposit is made up of and understanding where it is coming from.

I do just need to point out we aren’t just being nosey, honest! This is a regulatory requirement and it is something that your lender, whoever that may be, will need from us when we submit your mortgage application.

Your deposit could be in your savings, a Help to Buy Isa, Equity from your existing property, a divorce settlement, a lottery win (we don’t get many of these needless to say) or in fact a Gifted Deposit.

We ask this early in the process as we want to make sure we are placing you with the right lender.  I’ll go into this in further detail a little further on.

What is a gifted deposit mortgage?

One of the most difficult stages of getting on the property ladder, or even upsizing as your family grows, is having that money to put down as a deposit.  Saving that amount can be hard to do and a challenging, lengthy and sometimes the most frustrating part of the house buying process, especially for first time buyers.

However, all is not lost, and help is out there if you are lucky enough to have somebody in your life who thinks enough of you to want to give you a leg up on the property ladder.  That’s what a Gifted Deposit will help do for you.

It is an amount of money that will either enhance your own deposit or can be gifted to you as your full deposit to help you get the mortgage for the property you want to buy.

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Is it a Loan??

No… absolutely not and it’s really important to emphasise the word “Gift”!

If it were a loan, then it would be calculated as a monthly commitment that will need to be repaid and could affect your affordability in borrowing the amount you need to buy the property.

The Gifted Deposit is given to you on the understanding that it is exactly that, a Gift and will not need to be repaid.

What evidence of the Gifted Deposit will be needed?

The donor of the Gift will need to provide written confirmation of this, confirming that the Gifted Deposit does not have to be repaid nor do they hold any legal charge or legal interest in the property being purchased.

The donor will confirm in writing the amount of money they wish to Gift and what relationship they have with you, the applicant.  They will also need to provide evidence of the Gifted Deposit Funds by way of a Bank Statement as proof of where the monies are coming from.

It can differ from lender to lender how this information is captured, some lenders have their own Gifted Deposit templates which you will be provided with by your Mortgage Broker and other lenders will ask for a written letter from the donor.

It’s also worth noting your conveyancing Solicitor will do their own checks regarding the source of the deposit for Anti-money laundering procedures so don’t be surprised if you have to provide additional evidence to them further down the line when they are preparing your legal work.

They are likely to need ID from the donor amongst other evidence of where the gift is coming from. However, if we already have a lot of what they need on file which we have obtained to support your mortgage application and with the authorisation from the donor, we will do our best to help you in dealing with your solicitor to progress things as quickly as possible.

Does the Gifted Deposit have to be a certain percentage of the mortgage amount?

The Gifted Deposit amount can be as much or as little as your donor is happy to Gift you.  It can top up what you already have, even if your deposit on your new property is coming from the equity in your current house and you are upsizing for example.

It’s worth talking through with your Mortgage Broker the current rates depending on Loan to Value (The amount of deposit you have as a % of the property you are buying. For example a £20,000 deposit on a property of £200,000 is a 10% deposit, therefore, LTV is 90%.)

The more deposit you have, the better rate you get and often it can be a difference of a very small amount that will get you into that next LTV bracket and possibly a better rate so definitely consider this when thinking about how much Gifted Deposit you may be able to receive in addition to what you may already have or be able to contribute yourself.

Are there any Tax Implications regarding a Gifted Deposit?

A Gifted Deposit could have Inheritance Tax implications.

You, the home buyer and recipient of the Gifted Deposit may have to pay Inheritance Tax on the gift if the donor was to die within 7 years of gifting you that money.  If, however they live beyond the 7 years of you receiving the money, then there will be no Inheritance Tax due.  It is always advisable for the donor providing the Gifted Deposit to seek further advice from HMRC or their financial adviser regarding this.

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Who is able to provide you with a Gifted Deposit?

This is another area where a Mortgage Broker will certainly bring you added value and save you lots of time.  I mentioned it briefly at the very beginning and it is why it is important for us to understand early on in the process the source of your deposit.

We have access to over 90 lenders currently and their criteria on various aspects of Mortgage borrowing differs from Lender to Lender.  One of them certainly being Gifted Deposits.

Some lenders will only accept a Gifted Deposit from an immediate family member.  Others view this differently and will accept from a third party such as a family friend.  Some lenders will accept the Gifted Deposit from more than one donor if you are lucky enough to have a number of people wanting to gift you the money.

Our expertise will mean we will ensure we place you with the right lender for your individual circumstances.

How long does mortgage approval take? Buying a home can be a lengthy process. There are lots of viewings, mountains of paperwork, and many checks to go through before you get to the exchanging of keys and contracts.

Find out how long it takes to get a mortgage with our guide which covers everything you need to know about the mortgage application process.

If you need to borrow money, there is no moving forward with a house purchase until you have a mortgage approved by a lender.

How long it takes to get a mortgage can depend on a number of factors, including the likes of your credit rating, the results of a mortgage valuation survey, and your income and affordability assessment.

How Long Does a Mortgage Application Take To Be Approved?

The average time for a mortgage to be approved in the UK is typically between 2 to 6 weeks.

In some cases, it can be approved as fast as 24 hours but this is typically very rare.

How Long Does a Mortgage Application Take?

So, how long does it take to get a mortgage?

There are several things that can impact how long it takes to get a mortgage – the stages involved in a mortgage application are outlined below:

Mortgage Application Process Timeline:

Mortgage in Principle

The first step of the process is usually getting a mortgage in principle.

This is simply a statement from a lender, stating that they can lend you a certain amount to purchase a home ‘in principle’.

It is a really quick process if you have all the necessary documents ready (ID i.e. passport, 3-6 months bank statements, and proof of income) and have picked out a mortgage deal.

A lender will ask you for some basic information, such as your income, current financial status, etc., and will check your credit history, where they will verify you have the required credit score for a mortgage.

This is not a guarantee that a lender will definitely agree to a mortgage in the future, but it useful to have to show estate agents., as it will demonstrate that you are serious about buying.

Your estate agent will be able to show you homes that could be purchased with the loan agreed in principle.

Furthermore, an agreement in principle may speed up your application process once you have found a property you want to make an offer on, especially if you are going with the same lender.

Recommended guides: 

• Remortgage for home improvements.
• How long does mortgage approval take?
• Remortgage with bad credit.
• Remortgage for help to buy.
• How to sell a house.

The Mortgage Application

The next step in arranging a mortgage is the application.

Filling in your mortgage application is not a lengthy process, it should only take a few hours at the most, as long as you have your finances in order and the necessary documents and information at hand.

To determine the amount you are eligible to borrow and your reliability to pay it back, lenders will need evidence of the following:

• Details of the property you have put an offer on, as well as information on the seller’s estate agent and proof of your deposit.
• Valid ID, such as a passport, to prove your identity and proof of your current address, such as a utility bill.
• Three months bank statements, which can be used to show what your current outgoings are, including the likes of other credit commitments, childcare, utilities, leisure time, holidays, money to savings, pension contributions, etc.
• Up to six months of payslips to provide proof of your income, including any bonuses or overtime. If you are self-employed, your accounts and a few years of tax returns will be required to determine what monthly payments you can afford.

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A lender will review all this information and carry out a credit check.

If they need no further information or clarification from you, they will arrange a valuation of the property you are hoping to buy, to determine if it is priced correctly and suitable for a mortgage.

There are different types of mortgages, and make sure you are aware of the fees involved in buying a mortgage.

Usually, the valuation carried out by your lender will be a ‘Standard Valuation’, which is the minimum check required by law, before a mortgage can be approved.

An independent surveyor will carry out an inspection of the property, taking note of any major issues or defects that could affect the value property.

They will also investigate what similar homes in the area have sold for, to see how your desired property compares.

They will then complete a report known as a Standard Valuation, which will be reviewed by your lender.

If you want a more detailed survey – perhaps you have been burned before – there are a couple of more thorough evaluations you can carry out before moving forward with the mortgage process. They are:

• Full Buildings Survey – Used to be known as a Structural Survey, a Full Buildings Survey involves a comprehensive inspection of the condition of the property, including any structural abnormalities or defects, any necessary repairs, and maintenance requirements. This is useful for period properties, larger homes, or non-traditional builds.
• A Homebuyer’s Report – Includes more detailed information than a Standard Valuation, including information on any current or potential future issues with the property and maintenance and/or repair costs.

If your lender is satisfied with the valuation and all other checks, your mortgage application should be approved and your offer will become official.

Sometimes, the surveyor may determine that the sale price or your offer is higher than the value of the property.

This is actually quite common and could be due to a number of issues, such a market conditions, structural defects or just a seller overestimating the value of their property.

These downgraded valuations are not just there for the protection of the lender, but also for your protection, to prevent you from paying more for a property than it is worth, as this may put you into negative equity.

However, there are still options open to you to secure a mortgage in these instances.

You can contact the seller with the results of the valuation to discuss a potential reduction in the selling price.

If this is fruitless, and you really want the property you could increase your deposit amount to make up the shortfall.

Related reading? 

• Repayments on £80,000 mortgage. 
• Interest-only mortgages.
• Zero deposit mortgage.
• The first mortgage explained.
• What stops you getting a mortgage in the UK?

How long does it take to get a valuation done?

After you have submitted your mortgage application, your lender will instruct the surveyor to carry out a valuation, the aim of which is to ensure the property is worth the amount you want to pay for it.

The surveyor will contact the estate agent in control of the property and request access to carry out a thorough inspection and survey of the property so that they can check it is structurally sound and has no obvious issues.

This typically takes a day since most surveyors will create the report on the same day as the inspection and send it straight to the mortgage lender’s underwriter.

Once the mortgage lender’s underwriter has received a copy of your completed survey, they will check to see if the valuation makes sense and that there are no issues with the property highlighted in the report.

From start to finish, the entire valuation process takes around 2 weeks to complete on average.

How long does it take between a mortgage valuation and an offer?

After the valuation has been received from the surveyor, the lender’s underwriter will have all the required information to come to a final decision and will then be able to provide a mortgage offer.

At the point, the mortgage lender is willing to make an offer you will have it sent to you through the mail. Your conveyancing solicitor will also be mailed the offer.

It can take anywhere from 2 to 20 days to receive an offer.

How long does it take to exchange contracts?

Once your solicitor has received the offer from your lender, you should be able to exchange contracts with them in around 2 months.

During the mortgage application period, your solicitor will have been executing the conveyancing process.

This involves tasks such as applying to your local authority, for a market search, which takes around 1 month on average, although can take longer depending on how busy your local authority property and the land department are.

Other tasks your solicitor will have been doing include communicating with the seller’s solicitors and asking relevant and important questions.

Once all of the above tasks have been taken care of, your solicitor will book a meeting with you for a pre-exchange meeting, where you can ask questions and raise any issues.

If you are happy, they will then arrange a convenient time for a final competition date.

How long does completion take?

The competition date – the day you finally get to start life in your new home.

Once the exchange of contracts has taken place, your appointed solicitor will organise the mortgage to be finalised so that you now officially own your home.

The period from the exchange of contracts to the completion date depends on both the buyer and owner.

Once you have both agreed to a date, it takes 1 week from this point since this is the amount of time it will take to receive the funds once your solicitor has notified your lender.

Typically it takes around a month from the exchange of contracts to the completion.

How Long Does a Mortgage Offer Last?

A very common question we receive is “How long does a mortgage offer last?“, generally speaking, It can take between 2 and 6 weeks to get a mortgage offer.

However, if your application is a little more complicated, such as if you are looking to buy a non-standard build, or have bad credit, it may take longer.

Once your mortgage application has been approved, the offer is usually valid for 6 months. However, some lenders may have a completion deadline for their offer.

After this deadline has passed, you may be able to still use the same lender for a mortgage, but your eligibility is likely to be re-assessed as circumstances may change.

Therefore, you may have to start the application process again and your new offer may be altered depending on your current circumstances.

Is it possible to speed up the mortgage application process? 

A mortgage broker can really help with the mortgage process as they will be familiar with all of the latest deals on the market, and the ones you are most likely to be accepted for.

This will save you a considerable amount of time as you won’t have to research the deals that are best suited to your circumstances.

Your broker will also help you fill in your application forms and let you know what documentation you need to complete the process quickly.

Furthermore, they will handle the submitting of the application and liaising with your solicitor to get the whole process moving much quicker.

How long does it take to get a mortgage if I’ve got a poor credit history?

Getting a mortgage with poor credit is trickier. Most mainstream lenders are reluctant to loan to those with bad credit as their poor credit history doesn’t provide the assurance they need that the loan will be paid back.

However, this doesn’t mean that those with bad credit are completely ineligible for a mortgage.

There are a number of niche mortgage providers that specialise in securing mortgages for those with no credit history, or serious blemishes on their credit record.

These lenders will consider the severity of the credit issue, the duration of the credit issues, the age of the problem, along with the standard eligibility criteria for a mortgage.

It is likely that you will need to put down a larger deposit on a mortgage if you have bad credit as a bigger deposit will offset some of the risks of loaning to someone with bad credit.

You will also need documentation to prove that you can afford the monthly payments including bank statements and payslips.

Furthermore, your outstanding loans, along with any other outgoings will be assessed and may affect the amount that you can borrow.

If you have bad credit and are interested in buying a home, get in touch with an experienced mortgage broker who has access to the whole market.

They will be able to access a wider range of mortgage deals including those from speciality lenders that fit in with your requirements.

This will make the process of applying for a mortgage go much quicker than having to research individual lenders yourself, which is even more important for first time buyers.

Types of First Time Buyer Mortgages

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

• Family deposit mortgages 
• Shared ownership mortgages 
• Gifted deposit mortgages 

Key Takeaways on Your Mortgage Application Timeline

• A mortgage in principle may help to make the mortgage application process go a little smoother, by showing you and lenders what you can afford.
• A mortgage application requires valid ID & address verification, your estate agent and solicitor’s details, proof of income and outgoings and proof of deposit.
• A valuation of the property will be carried out to determine it is priced correctly and is suitable for a mortgage.
• Generally speaking, it usually takes two to six weeks to get a mortgage approved.
• The application process can be accelerated by going through a mortgage broker who can find you the best deals that suit your circumstances.
• A mortgage offer is usually valid for 6 months.

Call us today on 03330 90 60 30 or complete our quick and easy First Time Buyer Mortgage Application.

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