Getting a mortgage

If you're buying through Co-Own, you'll need a mortgage to purchase your share of the property. This works similarly to a standard mortgage, but there are some important differences.

This page explains how mortgages work with Co-Own, how to find a lender, and what to expect during the mortgage application process.

How mortgages work with Co-Own

When you buy through Co-Own, you're only getting a mortgage on your share of the property, not the whole value. This means your mortgage payments are lower than they would be if you were buying the whole property. You'll pay your mortgage to your lender each month, and you'll pay rent to Co-Ownership on the remaining share.

The mortgage is secured against your share of the property, and both you and Co-Ownership will be named on the property title according to your respective shares.

You can choose from the same types of mortgages available to any homebuyer, including fixed rate deals where your interest rate stays the same for a set period, variable rate deals where the rate can go up or down, and tracker mortgages that follow the Bank of England base rate.

The mortgage term, how long you take to repay the loan, is up to you and your lender. 

Finding a mortgage lender

Not all lenders offer mortgages for Co-Ownership, so it's important to work with one who understands how Co-Ownership works and has experience lending on eligible properties.

Several lenders in Northern Ireland work regularly with Co-Ownership. These lenders are familiar with our process, and understand how our model works.

We can't recommend specific lenders, but you’ll find a full list of the lenders willing to lend on Co-Ownership purchases below.

Working with a mortgage adviser

You can approach lenders directly, or many Co-Own customers find it helpful to work with a mortgage adviser, sometimes called a mortgage broker. An adviser can search the market on your behalf, find lenders who work with Co-Ownership, compare different deals and interest rates, handle your application and paperwork, and liaise with the lender throughout the process. They can also submit an application to Co-Ownership on your behalf, through their online account.

Mortgage advisers are regulated by the Financial Conduct Authority. You can find a qualified adviser through the FCA Financial Services Register, or by asking for recommendations from friends and family who've bought recently, or alternatively by searching for local brokers who have experience with Co-Ownership.

Some advisers charge a fee for their service, while others are paid commission by the lender. Make sure you understand how your adviser is paid and what it will cost you before you commit to working with them.

An adviser will take time to understand your circumstances, explain your options clearly, and help you find a mortgage that suits your budget and plans for the future. They should also be able to guide you through any challenges that come up during the application.

Timing your mortgage application

You can start speaking with mortgage advisers or lenders as soon as you have your Co-Ownership Approval. Some people prefer to get an Agreement in Principle before they start house hunting, as this shows sellers you're a serious buyer with finance in place.

An Agreement in Principle, sometimes called a Decision in Principle or mortgage promise, is a statement from a lender saying they're willing to lend you a certain amount based on an initial assessment of your circumstances. It's not a guarantee, but it gives you and sellers confidence that you can secure finance.

Getting an Agreement in Principle usually involves a soft credit check, which doesn't affect your credit rating. However, when you make a full mortgage application for a specific property, the lender will carry out a hard credit check, which does appear on your credit file.

Once you've found a property and your offer is accepted, you'll need to submit a full mortgage application. The lender will want details about the property, including the address, purchase price, and your share percentage. They'll also arrange for their own valuation of the property to confirm it's worth what you're paying for it.

The mortgage application process

When you apply for a mortgage, your lender will assess whether you can afford the repayments based on your income, your regular outgoings, any existing debts or credit commitments, your credit history, and the size of your deposit if applicable.

You'll need to provide proof of identity, proof of address, evidence of your income such as payslips or tax returns if you're self-employed, bank statements showing your income and spending patterns, and details of any existing loans, credit cards, or financial commitments.

The lender will also carry out a valuation of the property. This is different from the survey Co-Ownership arranges. The lender's valuation is an assessment to confirm the property is worth the amount you're borrowing. It's not a detailed survey of the property's condition.

The time it takes to process a mortgage application varies by lender, but typically takes between two and six weeks. Your adviser or lender will keep you updated on progress and let you know if they need any additional information.

Mortgage offers and completion

If your application is successful, the lender will issue a formal mortgage offer. This is a legal document that confirms they're willing to lend you the money, sets out the terms and conditions of the loan, confirms the interest rate and monthly payment, and states any conditions that need to be met before they'll release the funds.

Your solicitor will review the mortgage offer to make sure everything is in order. If you're happy with the terms, you'll sign to accept the offer and return it to the lender.

The mortgage funds are released on completion day. Your lender transfers the money directly to your solicitor, who then uses it along with any deposit or savings you're contributing to complete the purchase.

Mortgage deposit requirements

One of the advantages of buying through Co-Own is that deposit requirements can be lower than buying a property outright. As you're only getting a mortgage on your share, the deposit is a percentage of your share, not the full property value.

Some lenders who work with Co-Ownership offer no deposit mortgages, meaning you can buy your share without needing any savings upfront. Eligibility for these deals varies by lender and depends on your circumstances, so check their website or ask your adviser what's available.

If you do need a deposit, lenders typically require between 5% and 10% of your share value. For example, if you're buying a 60% share of a £150,000 property (£90,000), a 5% deposit would be £4,500.

Having a larger deposit can sometimes give you access to better interest rates, though this isn't always the case. Your lender or adviser can help you understand whether it's worth saving more before you buy.

Remortgaging and buying more of your home

When your fixed rate or deal period ends, you can remortgage to a new deal, potentially with a different lender if they offer better terms.

Remortgaging is also a common time to increase your share in your home. When you remortgage, you can borrow additional funds to buy more of your home from Co-Ownership. Your monthly mortgage payment will increase, but your rent to Co-Ownership will decrease because you'll own a bigger share.

Many Co-Own customers use remortgaging as an opportunity to gradually increase their ownership, until they eventually own their home outright.

What if your mortgage application is declined?

Common reasons for declined applications include issues with your credit history, affordability concerns based on your income and outgoings, problems with the property valuation, or not meeting the lender's specific criteria.

To avoid anything unexpected relating to your credit history, we recommend checking your credit file with Experian in advance of applying to Co-Ownership or for a mortgage, as this can flag any issues needing fixed in advance.

If you have an adviser, they can help you understand why your application was declined and suggest other lenders who might take a different view.