Shared Ownership Mortgage Bad Credit

Can I Get A Shared Ownership Mortgage With Bad Credit?

Yes you can. Having Bad Credit may make getting a mortgage in general a struggle. It can be really hard to get a mortgage if you want to use the Shared Ownership scheme as well. The good news for you is that there are options out there to suit most situations. It might be a bit more difficult though, so it’s best to speak to a specialist mortgage broker like us.

How Does Shared Ownership Work?

With Shared ownership you purchase part of your home, and rent the rest! This usually means you don’t need as much deposit and income as you would for a standard purchase.

For example if you bought a standard property valued at £300,000 you would usually need at least £15,000 deposit. However on the shared ownership scheme, you could purchase a 25% share of that property. This therefore means your share would only be £75,000 and your deposit would only need to be £3,750.

Can I Get A Shared Ownership Mortgage With A Default?

Yes, depending on how long ago it was, how much it was, what it was for you should be able to get a Shared ownership mortgage with Bad Credit. Check your credit file if you are unsure to find out the details of your bad credit and then get in touch to see if you fit. If your default was more than a couple of years old you should have options.

Can I Get A Shared Ownership Mortgage With A Ccj?

CCJ’s are very similar to defaults in regards to what is allowed. It really depends on how much it was, what it was for, and how long ago it was. With Bad credit we always recommend you find out all the details of your credit issues and then speak to a specialist.

I’ve Had An Iva, Can I Get A Shared Ownership Mortgage?

Possibly. IVA’s are much more serious than a default or CCJ usually. If you have had an IVA you may have to wait 3 years before considering the shared ownership scheme. As with other types of bad credit, find out all the dates and amounts and speak to a specialist.

How Do I Check My Credit History?

There are lots of credit reference agencies, and different lenders use different credit referencing agencies. We recommend that you check your credit report using Checkmyfile as it gives you the report from the 3 largest credit reference agencies that lenders tend to use.

Can A First Time Buyer With Bad Credit Get A Shared Ownership Mortgage?

Yes! First time buyers would usually be treated like anyone else when getting a Shared ownership mortgage for Bad Credit. Lenders will likely want to know how long ago it was, what it was for and how much it was to assess you. Get your credit report and speak to your Bank or a specialist Mortgage Advisor for Shared Ownership.

What Is Staircasing?

Staircasing is what they call it when you purchase more of your Shared ownership property at a later date. So you may buy an initial 25% of the property, but a few years down the line you can afford a bigger share, so you staircase a larger amount of ownership. This will increase your side, and potentially your mortgage. It would therefore decrease your rent usually.

Can You Get A 95% Shared Ownership Mortgage With Bad Credit?

You may find it harder to get a 95% shared ownership mortgage with Bad credit. Quite often you will need more deposit if you have Bad credit. That is not always the case though. It will largely depend on what your bad credit was for, when it was and how much it was. It’s definitely worth speaking to your Bank or a specialist Mortgage Advisor for Shared Ownership to see what your options are.

What Other Schemes Are Available For Bad Credit?

Government Help To Buy Scheme

The Government Help To Buy Scheme may be a better fit for you depending on your Bad Credit. Sometimes you may not fit criteria with the Shared Ownership Scheme but you would with Help To Buy. The other consideration is that some specialist lenders don’t do the Shared Ownership scheme but they do do the Government Help to Buy scheme. This scheme allows you to put down a 5% deposit and get a 20% equity loan from the government. This therefore means you only need a 75% mortgage, which leads to better monthly payments and better interest rates usually.

Right To Buy Scheme

The Right to Buy Scheme allows you to buy your council property from your Local Authority at a discount. Again if you have Bad credit you may fit this scheme if you don’t fit Shared Ownership.

Government First Homes Scheme

The First Homes scheme hasn’t been released yet. So we therefore don’t know what criteria it will have and whether it will be good for Bad Credit. However we do know it will be a minimum 30% discount on eligible New Build properties for First Time Buyers and Key Workers.

What Types Of Mortgage Are Available for Bad Credit?

Here are some popular types of mortgage for Shared Ownership with Bad Credit.

Discount Rate Mortgages

Discount rate mortgages offer a discount on the lenders variable rate. This means that as the lenders variable rate goes up and down so does your monthly payment. This can be good when rates are low, but if they go up you end up paying for it.

Fixed Rate Mortgages

Fixed rates are the most common type of mortgage. With a fixed rate of interest for a set amount of time you know what your monthly outgoings will be. They often have early repayment charges though, so it’s hard to make changes without paying a fee.

Tracker Rate Mortgages

Tracker rate mortgages tend to track the Bank of England Base rate. So as the base rate goes up or down your monthly payments will do likewise. Sometimes they will have a cap or collar so they can’t go above or below a certain amount. They also often do not have early repayment charges, making them quite flexible.

Got a question about a Shared ownership mortgage with Bad Credit we didn’t answer? Maybe we do on our main Shared ownership page. If not get in touch.