Thirteen will ensure that all cases meet Homes England affordability guidance as detailed in the Capital Funding Guide. Ensuring all purchases are affordable and sustainable. Further guidance on the methodology for assessing applicants can be found at 1.Shared Ownership 6.7.8 in Homes England Capital Funding Guide.
The extract below, from the Capital Funding Guide sets out the methodology for assessing applicants:
- (A) Gross income
- (B) Less gross
- (C) Less known commitments (loans, credit cards, childcare, etc.)
- (D) Less housing costs of the Shared Ownership purchase (rent and service charges)
- (A-B-C-D) = income available to support a mortgage, other essential expenditure (identified through a budget planner) and to meet the provider's surplus income policy
We will work to the policy that the applicant must have a minimum of 10% of their net mortgageable income remaining after all deductions and the five-year stress-tested rent level has been applied as part of the assessment process.
In addition to the Homes England affordability calculation, we would also expect the applicant to have a minimum of 10% of their total net income remaining on the panel mortgage broker's budget planner. This falls in line with the panel mortgage broker's mortgage compliance affordability. The panel mortgage broker will advise of the appropriate share to be purchased based on our affordability policy and is unable to suggest a share that does not fall within these parameters, as we would not deem it affordable or sustainable.
This rule shall apply irrespective of whether the applicant is using the panel mortgage broker, or if they have chosen their own route. As part of the sign off, the panel mortgage broker will provide both calculations to Thirteen to ensure that the purchase is both affordable and sustainable.
The affordability assessment is undertaken in two stages. The first stage will be based on the financial information that is provided by the applicant to the panel mortgage broker, who will provide an initial assessment based on this information. If the applicant passes the initial first-stage assessment, they will progress to a full assessment, that will require the applicant to provide documents to evidence the information provided in this initial assessment. The panel mortgage advisor can give you more detail around what documents need to be provided and how to do this at the point of initial assessment.
The 10% surplus helps to protect the applicant against possible increased costs or unforeseen circumstances that have not been budgeted. The panel mortgage advisor will be transparent and open in providing a detailed and reasoned explanation through the policy that we have set when providing the outcome of the assessment.
A more detailed presentation of the methodology and data examples can be found at 1.Shared Ownership 6.7.8 in Homes England Capital Funding Guide in the budget planner guidance note.
Please bare in mind an Affordability assessment does not constitute mortgage advice or guarantee the availability of a mortgage
Who’s Responsible for What? A Guide to Affordability Decisions
- If a shared ownership applicant does not meet one or more of the eligibility criteria for the shared ownership scheme, is unable to meet the requirements of the affordability assessment, is unable to meet one or more of the provider’s policies in this regard, or if they are unable or unwilling to provide the required information or documentation their application will likely be declined.
- If a shared ownership applicant wishes to purchase a different share level, either higher or lower, to that deemed affordable by their affordability assessment without providing a justifiable rationale or reason why, the Provider can either offer a different share level to that which the applicant would prefer or decline their application.
- A list of the various elements of the shared ownership application and assessment process, which organisation is responsible for each, and to whom queries, questions and complaints relating to each element should be directed.
Below is a table outlining the key stages of the buying process, along with who is responsible for each part.
