Shared ownership mortgage with bankruptcies

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The shared ownership scheme was introduced by the governmentto help families who earn lower incomes to buy a home. Housing association provide shared ownership homes and they operate by offering a share of the property ownership to first time owners. They get to purchase a share of between 25% and 75% while they pay rent on the remaining share. The shared ownership is accessible to people who previously owned homes and cannot afford that anymore or to people who are first time buyers. The government makes the scheme available to people who earn salaries lower than £80,000 each year. For a shared ownership mortgage, about 5% deposit is required as against the 10-20% deposit for other mortgage types.

Shared ownership mortgage is one of the cheapest ways to own a home and you can even upgrade your share of the property, although to do this, you will need the value of the property to be evaluated again and if it has increased, you will need to pay what you paid for the first share and you will also need to pay the valuer’s fee each time you request for an upgrade.

Sometimes shared ownership poses a challenge to people as they find it difficult to rent out the property they are sharing when they cannot afford 100% upgrade, but if you are confident that you can afford to pay for the 100% upgrade, you can opt for the shared ownership mortgage as it would be beneficial to you. One of the major differences spotted between people  who go for shared ownership mortgage lies on the deposit required which is a part of the money to be borrowed.

Before one can qualify for shared ownership mortgage, there are a number of criteria that need to be met which include if it is your first time of buying a home or you are a previous home owner who can no longer afford to purchase one now, or you are renting from a housing association, your income, credit rating, or if you have a long term disability. One of the criteria is also that you have to live in the property as you are not allowed to rent it out either fully or partially.Staircasing gives you the opportunity to buy more of your home from the housing association or the house builder based on how financially balanced you are till you buy up to 100% of it. Also, one if the differences between shared ownership and other mortgages lie in the fact that if you have baiugh 100% of the property, you can resell it yourself , although the housing association still have the right to refuse for the first 21 years after you have paid 100% of the purchase price. If you do not own the whole if the property, they also reserve the right to find the buyer themselves.

If you have a bankruptcy, it will be difficult for you to secure a shared ownership mortgage as this can mean lenders that you are more risk than they can accept. However, you still need to try other lenders as they relax their rules as the year passes by.

If you have a good credit history, you will only need to make a small deposit for the property which is around 5%. Having a recent history of bankruptcy would require that you put down a higher deposit and you will be charged a higher interest rate, but looking at the situation, it might turn out to be the only way you can own a home. You just need to prove to lenders that you can clear your debts. To get an idea of how much deposit you need to make and how high the interest rate would be, you should obtain your credit report from one of the three UK reference agencies (Equifax , Call credit or Experian) and if you notice any mistake, request for adjustments to be made immediately before you start applying for mortgages as it can have a very huge impact on your credit score.

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FCA disclaimer

Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.