Applying for a Shared Ownership Mortgage with Adverse Credit
What happens if you apply for a Shared Ownership scheme but have bad credit? Here we explain whether credit issues impact your Shared Ownership eligibility and the options available for applicants in search of a Shared Ownership mortgage bad credit product.
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Based on your yearly income,
you may be able to borrow
Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.
Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.
Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.
Can I Get a Remortgage to Pay Back an IVA?
The Shared Ownership scheme enables applicants to purchase a proportion of a property, from 25%. They pay rent for the remaining balance to the housing association and can buy more shares over time.
This initiative is a popular way to get on the property ladder for people who wouldn't otherwise be able to own their own home.
However, applying for the scheme and getting a Shared Ownership mortgage bad credit are two different things - and if you have bad credit, you may find that some lenders will not be willing to offer a loan.
Borrowers with an IVA looking to refinance a Shared Ownership mortgage bad credit agreement may find this challenging, although if they have evidence of responsible money management and have kept up with their repayments on an IVA they may be in a better position to apply for a Shared Ownership mortgage bad credit refinancing deal.
In this guide, our mortgage advisors team runs through how Shared Ownership works in a bad credit scenario. For assistance with your mortgage requirements, give us a call on 0330 304 3040, or email us at [email protected].
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Is Shared Ownership Open to Bad Credit Applicants?
In most cases, you can get a mortgage even with bad credit - being turned down by a high street bank doesn't in any way mean that a specialist lender won't be able to help!
The best solution is to work with a whole-of-market broker with access to all of the lenders, Shared Ownership mortgage bad credit products and rates in the UK, with the ability to negotiate terms on your behalf.
When it comes to credit reports, lenders will assess when your credit issues occurred, why, how much was involved, and if you've since repaid the debt to decide whether to offer a Shared Ownership mortgage bad credit agreement.
Remember that specialist bad credit lenders have more flexible approaches to Shared Ownership mortgage bad credit applications, so there is often a solution even where mainstream mortgage providers cannot help.
Is It Possible to Get a 100% Shared Ownership Loan If I Have Adverse Credit?
Possibly, but it would be much easier to start with a lower property proportion and work up to 100% ownership. However, if you have the 5% minimum deposit, you will have a better chance of approval on a Shared Ownership mortgage bad credit.
The higher your deposit, the lower the risk to the lender, and therefore the more likely they are to accept a bad credit Shared Ownership application.
Shared Ownership is designed to help prospective buyers who may have otherwise been unable to purchase a property, and if you are purchasing a smaller proportion of the home, which presents a lower risk, you may have a broader range of Shared Ownership mortgage bad credit products to choose from.
Expert Advice on Bad Credit Shared Ownership Mortgages
The key is always to consult an independent broker. If you have bad credit issues and apply to the wrong banks, having multiple credit checks and rejections on your credit file could make it significantly more challenging to find the loan you need.
If you require a Shared Ownership mortgage bad credit we would always recommend speaking to the Revolution Finance Brokers team to assess the most suitable solutions and compare the rates and terms available from lenders who offer a Shared Ownership mortgage bad credit product.
A Shared Ownership mortgage bad credit isn’t a specific mortgage category but refers to a mortgage suited to Shared Ownership purchases that is open to borrowers with adverse credit issues.
Much depends on the lender, the deposit you have available, the nature of your bad credit and the proportion of the property you’d like to buy through the Shared Ownership scheme.
As an independent, whole-of-market broker we can advise if you are interested in a Shared Ownership mortgage bad credit solution and would like professional support.
Several of the mainstream banks offer Shared Ownership mortgages, but their policies around bad credit will vary. It may be easier to secure a Shared Ownership mortgage bad credit through a specialist provider who has flexible rules around lending to bad credit applicants.
Most mortgage providers charge a higher interest rate on mortgage agreements where the applicant has a history of bad credit. However, it may be possible to negotiate more competitive Shared Ownership mortgage bad credit rates and fees by appointing a broker to liaise with your selected lender on your behalf.
Other ways to reduce the cost of a Shared Ownership mortgage bad credit could include offering a higher deposit, purchasing a smaller share of the property, or using a specialist lender who offers Shared Ownership mortgage bad credit products with a longer repayment term.
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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.
We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.