Shared Ownership Mortgage with Bad Credit

Steven Neale
By Published On: March 6, 2023Last Updated: July 11, 2024

Can you get a Shared Ownership mortgage with bad credit?

Yes you can. I have helped many clients with poor credit to buy their first home through the Shared Ownership scheme. These include people with all levels of poor credit issues, such as:

  • Missed and late payments
  • Defaults and CCJs
  • Debt management plans
  • IVAs
  • Mortgage arrears
  • Bankruptcy

Before applying for a Shared Ownership mortgage, it’s important that you check your credit file to understand whether you have any issues, such as missed payments, defaults or CCJ’s for example. You could look at one of the free reports from Equifax’s ‘Clearscore’ or TransUnion’s ‘Credit Karma’ or use Check My File for free for 30 days and then £14.99 a month – you can cancel online anytime – which checks all three credit reference agencies.

Can you get a 100% Shared Ownership mortgage with Bad Credit?

Yes you can. I work with a select few lenders who are able to provide 100% shared ownership mortgages to those with bad credit, making shared ownership a great option for those with little or no deposit.

Lenders of 100% shared ownership mortgages will look at the type of bad credit you have, such as missed payments, defaults or CCJs, as well as the status of these accounts and whether they are settled or outstanding. The lender will also consider how long ago these bad credit marks were registered.

Can you get a Shared Ownership mortgage if your partner has bad credit?

If you’re applying for a Shared Ownership mortgage as a joint application with your partner, their credit history will be equally considered on the application. If your partner has bad credit, such as issues with defaults or missed payments, you will likely have to use a specialist lender.

If both you and your partner have bad credit, there are still lenders who can help, depending on the severity of the credit issues, how they came about, and the status of them. For lesser credit issues like missed payments and defaults, your chances will be greater compared with more serious issues like bankruptcy and IVAs.

Can you get a Shared Ownership mortgage with defaults?

Yes, it is possible to get a Shared Ownership mortgage with defaults on your credit file. I work with a few lenders who are willing to lend with those with one or more defaults. 

The most important thing about getting a Shared Ownership mortgage with defaults is how long ago they were registered. Lenders will also consider the value of the default, and whether it has been repaid.

Can you get a Shared Ownership mortgage with a CCJ?

Although not easy, it is possible to get a Shared Ownership mortgage if you have a CCJ registered on your credit file. I’ve helped several clients with CCJs to buy their first property via the Shared Ownership scheme.

As with defaults, the lender will want to understand when the CCJ was registered and for what value. As a general rule, the longer ago the CCJ was implemented, the better your chances of acceptance.

Those with bad credit will find they usually have to provide a deposit if they wish to apply for a mortgage. Saving up such a deposit is no easy task which is why Shared Ownership is such a popular option for anyone with bad credit as you can borrow up to 100% of the share you want to buy.

Can I get a Shared Ownership Mortgage with an IVA?

It is possible to get a Shared Ownership mortgage having had an IVA. I work with a few lenders who are able to offer Shared Ownership mortgages to those who have had an IVA, who will consider when the IVA was registered and what the circumstances were around it. As with most credit issues, the longer ago it was, the higher chance of acceptance there will be.

Can I get a Shared Ownership Mortgage with a Debt Management Plan?

Similar to IVAs, I work with a few lenders who will consider applications for Shared Ownership mortgages from those who have had a DMP registered on their credit file. As with other credit issues, the details of the DMP will be the deciding factor when it comes to acceptance, with DMPs which are cleared and a few years ago having a greater chance of success.

What is the Shared Ownership scheme?

The Shared Ownership scheme was introduced to allow those on lower incomes to get on to the property ladder. The scheme works by allowing buyers to purchase a share of a property (usually 25% – 50% initially) while paying rent on the remaining share. 

How does it work?

If you wish to purchase a property costing £150,000 through Shared Ownership, you could start with an initial share of 25%. This would require a mortgage of just £37,500, which would enable someone working full-time on minimum wage to meet the income criteria for a mortgage, in most cases.

Another benefit of Shared Ownership mortgages is the small deposit required, due to the size of the mortgage. Using the example above, a 10% deposit would only mean having to save £3,750. However, I know of 2 lenders who would consider lending the full £37,500, meaning you would not have to save for a deposit at all.

In addition to the mortgage payments, you would also pay a monthly rental fee equivalent to 75% of the typical rental costs for the particular property.

Over time you have the option to purchase further shares of your property, usually in increments of 10%. This will also reduce the amount of rent you are currently paying on the share of the property which you do not yet own.

Who can get a Shared Ownership mortgage?

You are likely to be accepted for the Shared Ownership scheme if you meet the following criteria:

  • You are a first time buyer or previous homeowner who cannot afford to buy
  • You have an income of less than £80,000
  • You wish to buy a property which is offered through a Shared Ownership scheme

Where to start with Shared Ownership?

Start by looking in your area for Shared Ownership properties for sale. These can be new build or second hand properties offered by a Housing Association. Registering with your local Housing Association can keep you up to date with newly available properties.

Once you have found a property, call me with the details including the market value, share you want to buy and your deposit. From a 10 minute discussion, I will be able to determine if you could get a Shared Ownership mortgage, even if you have bad credit.

How I can help you get a Shared Ownership Mortgage with Bad Credit

There are very few lenders who offer Shared Ownership mortgages to those with bad credit. This makes getting the application right the first time vital. 

A specialist adverse mortgage broker such as myself has a full understanding of lending criteria for those offering Shared Ownership mortgages to those with adverse credit. I can use this to match you to a lender who I am confident will accept your application for a Shared Ownership mortgage.

For more information on Shared Ownership mortgages with bad credit, please call me 01494 526400 or complete my online enquiry form.

A quick overview of the topics covered in this article.

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Shared Ownership Mortgage with Bad Credit

Steven Neale
By Published On: March 6, 2023Last Updated: July 11, 2024

Can you get a Shared Ownership mortgage with bad credit?

Yes you can. I have helped many clients with poor credit to buy their first home through the Shared Ownership scheme. These include people with all levels of poor credit issues, such as:

  • Missed and late payments
  • Defaults and CCJs
  • Debt management plans
  • IVAs
  • Mortgage arrears
  • Bankruptcy

Before applying for a Shared Ownership mortgage, it’s important that you check your credit file to understand whether you have any issues, such as missed payments, defaults or CCJ’s for example. You could look at one of the free reports from Equifax’s ‘Clearscore’ or TransUnion’s ‘Credit Karma’ or use Check My File for free for 30 days and then £14.99 a month – you can cancel online anytime – which checks all three credit reference agencies.

Can you get a 100% Shared Ownership mortgage with Bad Credit?

Yes you can. I work with a select few lenders who are able to provide 100% shared ownership mortgages to those with bad credit, making shared ownership a great option for those with little or no deposit.

Lenders of 100% shared ownership mortgages will look at the type of bad credit you have, such as missed payments, defaults or CCJs, as well as the status of these accounts and whether they are settled or outstanding. The lender will also consider how long ago these bad credit marks were registered.

Can you get a Shared Ownership mortgage if your partner has bad credit?

If you’re applying for a Shared Ownership mortgage as a joint application with your partner, their credit history will be equally considered on the application. If your partner has bad credit, such as issues with defaults or missed payments, you will likely have to use a specialist lender.

If both you and your partner have bad credit, there are still lenders who can help, depending on the severity of the credit issues, how they came about, and the status of them. For lesser credit issues like missed payments and defaults, your chances will be greater compared with more serious issues like bankruptcy and IVAs.

Can you get a Shared Ownership mortgage with defaults?

Yes, it is possible to get a Shared Ownership mortgage with defaults on your credit file. I work with a few lenders who are willing to lend with those with one or more defaults. 

The most important thing about getting a Shared Ownership mortgage with defaults is how long ago they were registered. Lenders will also consider the value of the default, and whether it has been repaid.

Can you get a Shared Ownership mortgage with a CCJ?

Although not easy, it is possible to get a Shared Ownership mortgage if you have a CCJ registered on your credit file. I’ve helped several clients with CCJs to buy their first property via the Shared Ownership scheme.

As with defaults, the lender will want to understand when the CCJ was registered and for what value. As a general rule, the longer ago the CCJ was implemented, the better your chances of acceptance.

Those with bad credit will find they usually have to provide a deposit if they wish to apply for a mortgage. Saving up such a deposit is no easy task which is why Shared Ownership is such a popular option for anyone with bad credit as you can borrow up to 100% of the share you want to buy.

Can I get a Shared Ownership Mortgage with an IVA?

It is possible to get a Shared Ownership mortgage having had an IVA. I work with a few lenders who are able to offer Shared Ownership mortgages to those who have had an IVA, who will consider when the IVA was registered and what the circumstances were around it. As with most credit issues, the longer ago it was, the higher chance of acceptance there will be.

Can I get a Shared Ownership Mortgage with a Debt Management Plan?

Similar to IVAs, I work with a few lenders who will consider applications for Shared Ownership mortgages from those who have had a DMP registered on their credit file. As with other credit issues, the details of the DMP will be the deciding factor when it comes to acceptance, with DMPs which are cleared and a few years ago having a greater chance of success.

What is the Shared Ownership scheme?

The Shared Ownership scheme was introduced to allow those on lower incomes to get on to the property ladder. The scheme works by allowing buyers to purchase a share of a property (usually 25% – 50% initially) while paying rent on the remaining share. 

How does it work?

If you wish to purchase a property costing £150,000 through Shared Ownership, you could start with an initial share of 25%. This would require a mortgage of just £37,500, which would enable someone working full-time on minimum wage to meet the income criteria for a mortgage, in most cases.

Another benefit of Shared Ownership mortgages is the small deposit required, due to the size of the mortgage. Using the example above, a 10% deposit would only mean having to save £3,750. However, I know of 2 lenders who would consider lending the full £37,500, meaning you would not have to save for a deposit at all.

In addition to the mortgage payments, you would also pay a monthly rental fee equivalent to 75% of the typical rental costs for the particular property.

Over time you have the option to purchase further shares of your property, usually in increments of 10%. This will also reduce the amount of rent you are currently paying on the share of the property which you do not yet own.

Who can get a Shared Ownership mortgage?

You are likely to be accepted for the Shared Ownership scheme if you meet the following criteria:

  • You are a first time buyer or previous homeowner who cannot afford to buy
  • You have an income of less than £80,000
  • You wish to buy a property which is offered through a Shared Ownership scheme

Where to start with Shared Ownership?

Start by looking in your area for Shared Ownership properties for sale. These can be new build or second hand properties offered by a Housing Association. Registering with your local Housing Association can keep you up to date with newly available properties.

Once you have found a property, call me with the details including the market value, share you want to buy and your deposit. From a 10 minute discussion, I will be able to determine if you could get a Shared Ownership mortgage, even if you have bad credit.

How I can help you get a Shared Ownership Mortgage with Bad Credit

There are very few lenders who offer Shared Ownership mortgages to those with bad credit. This makes getting the application right the first time vital. 

A specialist adverse mortgage broker such as myself has a full understanding of lending criteria for those offering Shared Ownership mortgages to those with adverse credit. I can use this to match you to a lender who I am confident will accept your application for a Shared Ownership mortgage.

For more information on Shared Ownership mortgages with bad credit, please call me 01494 526400 or complete my online enquiry form.

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