Spouse ILR - are both passports kept whilst processing?

[mirnat]

My husband's 2 year spouse visa is due to expire on 13th March this year so he will be applying soon for ILR. When does he have to apply in post by (or is better to do it in person as our case should be very straightforward as we have a tenancy agreement/bills in both names/joint bank account/are both employed etc)?

Also do both his and my original passports have to be submitted with a postal application? His original obviously to have the ILR stamp but what about mine? If I do need to submit my original passport, will they return it to me early or only when they've finished processing his application? I'm planning to travel in March and have heard stories that they can take up to 3 months to process the ILR applications by post (which would take us until at least May!).

Thanks for all your replies!