Adverse Credit Mortgage Shared Ownership

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Bad Credit Mortgage Shared Ownership – What you need to know 

Shared ownership is a popular scheme. It helps individuals, couples, and families get onto the property ladder. For those who are also new to the property market, getting onto it can be the hardest part. It’s important that you get clued up on all the information about shared ownership. There are many benefits that it can provide you with. It’s also worth knowing about what options are out there when you have adverse credit.

In this article, we’ll be explaining how to get onto the property market. if you’re someone who is exploring shared ownership, read on.

What is adverse credit? 

Adverse credit is where you have been late on making repayments. Whether that’s a loan on a car, a financial plan on a laptop, or outstanding credit card debt. All these occasions of late repayments can result in you having a bad credit score. This can hinder your efforts in getting a mortgage. 

We are not debt advisors or councillors, but if you are seeking advice on managing existing debts specialist assistance is available e.g. the charity Step Change or Citizens Advice. 

Ideally, you want to be in a good zone when it comes to your credit score, but that’s not always possible. But what does that mean for securing a mortgage on adverse credit history? Is it possible to do so?

What is an adverse Credit Mortgage? 

An adverse credit mortgage is where you’re able to secure a mortgage, even with an adverse credit history. There are specialist lenders out there who can secure you a mortgage, even with a poor credit score. Typically, you’d find it more difficult getting a mortgage with adverse credit than you would without. 

You should also note that if you do have adverse credit, it may mean your interest rates are higher.

What’s Shared Ownership? 

When you can’t quite afford a mortgage on 100% of a home, shared ownership is a viable option. It means that you can purchase a share of the home – between 25% and 75%. What is leftover, you’ll pay rent towards. It gives you the opportunity to get onto the property market sooner than later. Renting is often seen as dead money, so having this chance to purchase part of a property is useful. 

At some point in the future, you can then look to buy a bigger share of the home when you can afford to. It’s something that can be useful for those who are on a lower income and therefore find it difficult to save for a deposit. With shared ownership, you’ll be able to get a property more easily. It can be handy for those with disabilities and also those who are older.

Can you apply for Shared Ownership mortgages if you have adverse credit? 

With a shared ownership scheme, people with adverse credit have a better chance to save the deposit needed. However, even though it might be a more advantageous scheme, those with bad credit ratings might find it difficult to qualify.

Lenders may be apprehensive in dealing with those who’ve had money problems in the past. It can be especially alarming when those individuals have filed for bankruptcy or have adverse credit outstanding. Landing yourself in debt isn’t helpful, even with shared ownership schemes.

It shouldn’t be something that stops you from attempting to apply for shared ownership though. Even if you have adverse credit, you can still have a chance of being successful with the right lender.

How do I improve my credit score? 

Improving your credit score is important no matter what type of mortgage or buying scheme you’re going for. The better your credit rating, the more likely it will be that you secure a mortgage. There are ways to improve your credit score, and it’s worth putting these tips into practice. The sooner you can do it, the better.

  • Try to reduce your debt and ensure all payments are on time. Set reminders to help you remember. 
  • Be sparing with the borrowing you do throughout the year and space it out. Try not to borrow too much all at once.
  • Register onto the electoral register if you haven’t already.
  • Consolidate any debt so that you can manage it better. It also helps reduce any extra fees or interest that can lengthen your repayments.

Keep an eye on your credit score and your credit report. Make sure everything is as it should be. That way, when it comes to you applying for a mortgage, you have every chance of getting it. Shared ownership schemes are certainly beneficial for some, so it’s worth taking full advantage of this advice for the sake of your future.

A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Other types of mortgages are available such as Variable, Cashback, Capped, Collared & LIBOR.