Understanding your personal circumstances is vital in finding the right equity release plan for you.
Shared Ownership Mortgages With Bad Credit
Need Help Getting a Bad Credit Shared Ownership Mortgage?
Shared Ownership Mortgages With Bad Credit
When the government recognised the increasing difficulties for borrowers struggling to get a foot on the property ladder, they introduced a number of schemes designed to give potential home owners a much needed helping hand. There’s one scheme however, that has already been helping people for some time – the shared ownership scheme.
If you’re on the lookout for a property of your own but are concerned that limited funds and a bad credit rating could stand in your way, speak to Amber Mortgage Solutions today. Our team of experienced bad credit brokers can help to find a shared ownership mortgage that’s right for you.
Shared Ownership Mortgages Explained
So what is shared ownership? The shared ownership scheme allows people to buy a share in their home even if they cannot afford a mortgage on the entire value of the property.
The buyer purchases a share of the property – usually 25%, 50% or 75% – and the remaining balance is owned by a government-backed housing association or private investor. More often than not, the homeowner will then pay rent on this balance.
With shared ownership for bad credit, if your circumstances change and you can now afford more, then you can increase your share in the property. For example, if you start out with a 25% share then you can increase this to 50%, 75% or with some schemes, this can be increased to 100%, giving you full ownership. As your share in the property increases, the rent you pay to the housing association will decrease accordingly.
People seeking a shared ownership mortgage also need to be aware that only properties offered by participating government-backed housing associations, typically new builds, can be purchased under the scheme.
Who Can Apply For a Shared Ownership Mortgage?
Those who can apply for a mortgage under the shared ownership scheme include:
- First-time buyers
- People who have an existing mortgage under the shared ownership scheme and wish to move property
- People who have previously been homeowners, but do not own a property now and cannot currently afford to buy one
- People who earn less than £80,000 per annum (£90,000 for those living in London)
Whilst the criteria for shared ownership is considered very flexible in terms of lending high loan to values (LTV) to people with adverse credit, it is still important that you are able to demonstrate that you can afford your mortgage and rental payments, as well as put down the required deposit.
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Do I Still Qualify For Shared Ownership With Bad Credit History?
Getting a bad credit history shared ownership mortgage can seem tricky. Negative records such as IVAs, CCJs, defaults or bankruptcy on your credit report can result in lenders regarding you as more of a risk, reducing your choice of mortgage deals.
Fortunately, whilst a history of adverse credit can restrict the number of lenders available to you, it doesn’t mean the end for your property ownership journey. There are specialist lenders out there who will be happy to consider your application and still offer you a competitive deal on a bad credit mortgage for shared ownership.
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Shared Ownership With Bad Credit
Someone with a clean credit report will typically only be expected to provide a small deposit of 5%. However, if you have a recent history of bad credit or serious adverse credit incidents, such as property repossession or a bankruptcy, then you might be asked to provide a deposit of 15% or more. It is also more likely that you’ll have to pay a higher rate of interest on your loan.
Higher rates of interest and a slightly larger deposit however, are a small price to pay if a shared ownership mortgage is currently your only way to becoming a home owner.
Affordability is a big factor when it comes to lenders approving any mortgage application. Because of this, you must be able to prove that you are capable of paying mortgage and rent on a property, on time.
For a better idea of what your credit history means for your application, the best first step you can take is to obtain copies of your credit report. You can do this for free from each of the UK’s biggest credit reference agencies, Callcredit, Experian and Equifax.
Finding Bad Credit Mortgage Lenders For Shared Ownership
Getting a bad credit shared ownership mortgage doesn’t have to be a struggle. At Amber Mortgage Solutions our specialist bad credit brokers take great pride in helping to secure our customers the best deals on the market to suit their needs.
Regardless of your credit score and history, our unlimited access to the market and exclusive rates means we’re able to find you an affordable bad credit shared ownership mortgage, alongside personalised mortgage advice.
