Shared ownership with bad credit

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 shared ownership mortgage with bad credit

Shared ownership mortgageenables people who cannot afford to purchase a mortgage alone buy a share in one.  The share is usually half, one-quarter or three-quarter of the purchase price while the balance is owned by ahousing association owned by the government. The owner of the home pays rent to the housing association to cover the share they have not bought. In shared ownership mortgage, if you start with a particular share and situations change making you able to afford more than that, you can increase your stake even up to 100% for full ownership. The shared ownership scheme was put in place to help people who have owned a house previously, but do not own one presently and can’t afford to purchase one outrightly, it also helps people who have existing mortgage under the shared ownership program and wish to move, as well as people who earn less than £90,000 per annum starting a family.

GETTING A SHARED OWNERSHIP WITH BAD CREDIT

It is quite challenging to get a shared ownership mortgage with bad credit ratings. Things like missed payments, County court judgements, bankruptcy, can have a negative impact on your credit records and would make lenders see your involvement in a shared ownership mortgage as serious risk. Having a good credit rating makes you eligible to get a mortgage just with a small deposit, unlike in cases of bad credit record where you will be required to deposit as high as 15%.

First of all, you need to get your credit report so you can know where you stand and be able to estimate the amount you need to save up for the mortgage.  You are entitled to a free copy of your credit report from the three credit bureaus (Equifax, Call credit, and Experian) every year. Once you get the report, go through it to make sure there are no errors, if you notice any error, report immediately. If there are no errors, then you need to start seeking for ways to improve on your records. Traditional lending institutions are usually reluctant to lend to people who have poor previous track records of borrowing, even the  ‘high street’ lenders are also reluctantto offera shared ownership mortgage to individuals who have  bad credit. However, there are other lenders who may consider people with adverse credit ratings for a shared ownership mortgage, although this comes with a higher interest rate as they are trying to protect themselves. You also need to bear in mind that non repayment if loans in line with the agreement and terms of the mortgage can result to repossession if your hohom

Mortgage brokers have specialists who understand the market and assist people with bad credit records get the best deals for mortgages. They also provided mortgage advice and help you with the application. Most of the shared ownership homes are purpose built properties, so you won’t need to do a lot of renovations, this keeps the total cost in check. To get one, there are several high Street lender’s who are currently offering them and most of them offer at similar rates to the standard mortgage properties. The deposit you have to pay is usually around 5-10% of the property share you want to purchase. Due to the fact that you are not purchasing 100% of the property, you will need to pay less than that, but ensure you factor in other costs like fee for the valuation I’d the property which the mortgage provider will request to make sure the home is worth the price it is being sold for. The valuation fee is usually between £500 to £1000 and sometimes you can even pay higher than that.

In addition to that, there are also legal costs you have to pay as well as the stamp duty charge.

Bear in mind that bad credit or a poor credit score do not last forever and the scores change monthly, so by taking actions bow on any recurring issue that has been flagged by several lender’s, you can improve your score by rectifying them. Even if you have County Court Judgment or bankruptcies in your file, it will be removed from your file over a long period of time and there are specialist mortgage brokers who can also help you out too.

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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.