The issue of shared ownership is a major issue for many people looking to arrange their financial future.
What is a shared ownership mortgage?
A shared ownership mortgage is where you buy a share within the property, generally with a deposit and the help of a mortgage, and you then rent the remaining share. You do have the option in the future, to purchase a more significant percentage of the property from the housing association – this is known as ‘staircasing’.
How does this style of mortgage work?
For example – a property worth £100,000 and you intend to buy a 40% share. You may have a deposit to put down of 10%. In this example, you will purchase 40% of the property (£40,000), and you will put down a 10% (£10,000) deposit, you will get a mortgage for 30% (£30,000), and the remaining share of 60% the housing association will own, and you will pay monthly ‘rent’ to them.
How much mortgage can I get for shared ownership?
You can get a mortgage for 100% of the share you wish to purchase, so no deposit is needed. However, the more prominent the deposit you can put down the cheaper the mortgage rate and monthly payments will be. There are lots of shared ownership mortgages available, so you should speak to a mortgage broker for advice in this area.
How to apply for a shared ownership mortgage
It would be best if you spoke to a mortgage broker for advice. There are lots of shared ownership mortgages available on the market, so a mortgage broker will source the most suitable based on your circumstances and give you advice on not only the shared ownership mortgage but also protection policies you may want to consider.
Can you get this mortgage with bad credit?
Yes. To generally qualify for most high street banks and building societies, you need to have a good credit score and not have any bad credit registered such as defaults, or CCJs within the last three years. However, there are specialist lenders available through mortgage brokers who will consider you for a mortgage if you have a low credit score, defaults, CCJs (county court judgments), and missed payments registered against you. It would help if you spoke to a specialist bad credit mortgage broker for advice in this area.
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DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.