Who Are Clever Mortgages and How Can We Help? At Clever Mortgages, we specialise in helping individuals secure the right mortgage for their needs, including shared ownership mortgages. Whether you have bad credit, no credit history, or are struggling to save for a large deposit, our expert brokers can guide you through the process and find the best solutions for your circumstances. We work with a wide range of lenders, including those who cater to clients with adverse credit histories, ensuring that you have the best chance of securing a mortgage that works for you.
What is Shared Ownership? Shared ownership is an affordable homeownership scheme designed to help first-time buyers, those with lower incomes, or people with bad credit history get onto the property ladder. Instead of purchasing a property outright, you buy a percentage (usually between 25% and 75%) and pay rent on the remaining share to a housing association.
Shared ownership can be a great option if you struggle to save for a large deposit or have difficulty securing a traditional mortgage due to a low credit score or limited credit history.
How Does a Shared Ownership Mortgage Work? A shared ownership mortgage is a loan that covers the portion of the property you are buying. The rest remains under the ownership of the housing provider, with rent payable on that share.
For example, if you purchase 50% of a property worth £200,000, your mortgage will be for £100,000. You will then pay rent on the remaining £100,000, usually at a subsidised rate.
Can You Get a Shared Ownership Mortgage with Bad Credit? Yes! While having bad credit or no credit can make securing a mortgage more challenging, many lenders offer shared ownership mortgages tailored to those with less-than-perfect credit. These lenders consider factors beyond just your credit score, such as income stability and affordability.
Top Benefits of Shared Ownership for Those with Bad Credit
- Lower deposit requirements – As you only need a mortgage for a portion of the property, the deposit is lower than a full mortgage.
- More accessible mortgage options – Some lenders are willing to offer shared ownership mortgages to those with bad credit, as the risk is lower than a traditional mortgage.
- Opportunity to build your credit – By keeping up with mortgage payments, you can gradually improve your credit score.
- Option to buy more shares over time – Known as staircasing, this allows you to increase your ownership percentage as your financial situation improves.
Who is Eligible for Shared Ownership? To qualify for a shared ownership scheme, you typically need to meet the following criteria:
- Your household income is under £80,000 per year (or £90,000 in London).
- You are a first-time buyer, or you previously owned a home but can no longer afford to buy outright.
- You have a good track record of paying rent and other financial commitments.
- You can afford the mortgage and rent payments.
Challenges of Shared Ownership for Bad Credit Applicants While shared ownership is a fantastic route for many, there are a few challenges:
- Fewer lender options – Not all banks offer shared ownership mortgages for those with poor credit, so you may need a specialist lender.
- Higher interest rates – Some lenders charge higher rates if your credit score is low.
- Ongoing rent payments – Although subsidised, rent still needs to be factored into your affordability calculations.
- Restrictions on selling – Selling a shared ownership home can be more complex than a traditional property sale.
How to Improve Your Chances of Getting a Shared Ownership Mortgage If you have bad credit or no credit history, taking steps to improve your financial situation can increase your chances of mortgage approval:
- Check Your Credit Report – Review your credit file and fix any errors that may be affecting your score.
- Register on the Electoral Roll – This makes it easier for lenders to verify your identity and address.
- Pay Off Outstanding Debts – Reduce outstanding loans, credit cards, and other financial obligations.
- Build a Credit History – Use a credit card responsibly, ensuring payments are made on time.
- Save for a Larger Deposit – The more you can put down upfront, the better your mortgage terms will be.
- Seek Expert Mortgage Advice – A specialist mortgage broker, like Oak Mortgages, can help you find lenders willing to offer shared ownership mortgages for bad credit applicants.
Why Choose Clever Mortgages for Your Shared Ownership Mortgage? At Oak Mortgages, we take the stress out of finding the right mortgage. Our team of expert advisors understands the challenges faced by first-time buyers and those with credit issues. We work with a wide range of lenders, including those who specialise in shared ownership mortgages, ensuring that you get the best deal available. Whether you’re looking to buy your first home, move into a new property, or explore staircasing options, we are here to help you every step of the way.
Conclusion Shared ownership is a fantastic opportunity for first-time buyers, low-income households, and individuals with bad credit who want to step onto the property ladder. While there are challenges to securing a shared ownership mortgage with poor credit, there are lenders who specialise in these cases, and with the right preparation, homeownership could be within reach.
If you want to explore your options, speak to Oak Mortgages today. Our team is ready to guide you through the process and help you secure the best shared ownership mortgage for your situation.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
