Shared Ownership Bad Credit Mortgages

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Home » Mortgages » Shared Ownership Bad Credit Mortgages

Shared Ownership Mortgage With Bad Credit

A Shared Ownership Mortgage is a government scheme that helps first-time buyers or previous homeowners who are unable to buy currently. Shared ownership mortgages work by buying a portion of the property and paying rent on the rest of the property. A buyer, for example, may initially opt to purchase 25% of the property with the remaining 75% being owned by the housing association or council.

To qualify for the shared ownership mortgage scheme your joint family income will need to be under £60,000 p/a and you will need to be either a first-time buyer or in a position where you are unable to purchase a new home outright.

There exists a process called stair-casing that allows the purchase of further shares of your house until such stage as you have purchased the entire property. The agreed sale price is via the housing association and will be dependent upon market conditions. That is, if your property has increased in value since your initial ownership then you will need to pay more, and if the property has devalued then you will pay proportionally less for your increased percentage of the property.

Shared Ownership Mortgages for people with bad credit


  • Get your foot onto the property ladder
  • It may be cheaper to buy part of the property and pay rent on the remainder when compared to renting privately.
  • You can staircase and purchase more of the property share over time.
  • More security knowing that a landlord will not ask you to leave.


  • If you wish to make significant changes to the property such as a new kitchen or extension, you will need to get permission first.
  • If you were to sell the property you will have to seek advice from the housing association before putting it on the open market.
  • If you want to staircase and purchase more of the property, the property will need to be revalued and the cost of the share may have increased.

Many of the high street lenders offer shared ownership mortgages and if you are declined by the high street lenders due to a low credit score or bad credit, we have lenders that can still help you purchase your property.

What is a Shared Ownership Mortgage?

A shared ownership mortgage allows buyers to purchase a share in property – this can either be a new build or a resale property. The share on the property tends to be on quarter, one half or three-quarters, and the balance is owned by the Government-backed housing association. The homeowner will then pay the rent to the housing association for the share that they have not purchased.

For example, you could start with a 25% share in the property and your circumstances may change along the way, meaning that you can afford a bigger mortgage, so you will then be able to increase your stake at a later date to a 50% or 75% share of the property, or for some Shared Ownership schemes, up to 100% for full ownership. The rent that you pay on the property will decrease in line with the reduced amount of the property owned by the housing association, so it’s a great scheme for first time buyers who want to get onto the property ladder.

Would I be eligible for the scheme with bad credit?

Your eligibility for the Shared Ownership scheme will highly depend on your situation. The Government created the scheme to help people in some specific circumstances to buy a home, including first-time buyers, people who have an existing mortgage under the Shared Ownership scheme who wish to move, and people who have previously owned a property, but do not own one now, who cannot afford to take on a full mortgage outright.

If you fit the criteria for the scheme, then you are likely to be accepted for a Shared Ownership mortgage.

Can I get a Shared Ownership Mortgage with Bad Credit?

If you have a bad credit rating, perhaps because you have failed to stick to your credit agreement or paid the bare minimum on your credit card each month, this can make it harder to secure a Shared Ownership mortgage. Bad credit can affect your application, however with the help of The money Hub, we can help you to give yourself the best chance of having your application accepted.

As specialist brokers in the industry, we are able to help applicants with a bad credit history. Even if you have been turned down by building societies and high street banks in the past, it is still possible that you can secure a Shared Ownership mortgage. Our specialist panel of lenders will be able to assess your affordability and credit history, and provide you with relevant information on suitable products for you.

Your property ownership options

When you buy a property with other people, you need to choose how it is going to be owned – this is usually as joint tenants or as tenants in common. You can also enter into a joint mortgage with your parents where they act as guarantor.

Joint tenants

This option might be suitable if you are married or in a long-term relationship with the person you are buying with. It means you will each:

  • Have equal rights to the property.
  • Can claim an equal share in any profit made if the home is sold.
  • Will automatically inherit the property if the other person dies.

Tenants in common

This option might be suitable if you are teaming up with friends or family members to buy a home. It means you:

  • Can each own a different share of the property
  • Will not automatically inherit the property if the other tenants die
  • Can choose who to leave your share to in your will

If you choose to be tenants in common, you should consider asking your solicitor to set up a deed of trust.

Buying with your family as guarantor

You can apply for a joint mortgage with members of your family. This option could enable you to afford a larger mortgage and access a wider range of mortgage deals. You will have full ownership of the property, and your family members will not be liable for Stamp Duty.

Both you and your family will be responsible for all mortgage repayments and charges, so you will all need to demonstrate that you can afford the repayments. Your parents will also need to show us that they have taken independent legal and tax advice, so they understand the risks involved.

If your circumstances change and you can afford the repayments on your own, you can remortgage and release your parents from the joint mortgage.

How much deposit do you need for a Shared Ownership Mortgage?

You will need a mortgage to help buy the share of the property but much like the Governments Help to Buy scheme, you can get one with a smaller than average deposit. Instead of forking out a 10-20% deposit, shared ownership mortgages will usually only require 5% of the property value although some specialist lenders may provide a 100% mortgage of the share you are buying.

Is shared ownership better than renting?

Shared Ownership makes mortgages more accessible, even if you are on a lower wage. Your monthly repayments can often work out cheaper than if you had an outright mortgage. The monthly payments are also generally lower than if you were to rent privately and, unlike private renting, you have security on tenure.

Is there a minimum income for shared ownership?

There is no set minimum income allowance for Shared Ownership. If you have a large amount of cash to put down on a property this will simply make the mortgage payments more affordable.

How can bad credit Shared Ownership Mortgages help?

If you have had bad credit registered in the past such as missed payments, defaults or County Court Judgements (CCJ’s) we have lenders that would still consider providing you with a mortgage. Typically this ‘bad credit’ will need to have been registered more than 12 months ago. For more information about shared ownership mortgages please complete the above form and an adviser will give you a call.

Contact the Shared Ownership Mortgage experts today

If you are unable to get a Shared Ownership mortgage from high street lenders or building societies due to bad credit such as missed payments, defaults or County Court Judgements (CCJ’s), we have lenders who are willing to lend.

For mortgage advice on Shared Ownership mortgages, please complete the contact form and an adviser will give you a call to discuss further.

Related articles from our blog:

First-time Buyers – 5 Ways to Get on the Property Ladder

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Shared Ownership FAQ’s

This is where you buy a share in the property and rent the remaining share. For example if the property value was £100,000 you may choose to buy a 40% share and then rent the remaining 60% from the housing association for example. You do have the option to staircase in the future and buy more shares within the property.

Yes – however it depends upon many factors to see if we can help source a mortgage lender for you. We will want to see a credit report which will show your credit profile over the last 6 years. Lenders will look at what type of debt the payments were missed on, when these missed payments took place, have you since caught up with the payments etc. It is best to call the office to discuss this with an experienced mortgage adviser for advice and a review of your options.

Some lenders do not have a minimum income requirement, however it is important to make sure that any borrowing is affordable throughout the mortgage term. The adviser will run through a full income and expenditure review to make sure any mortgage is affordable and does not put you under any financial strain.

There are lenders that accept clients who have defaults registered on their credit report and therefore a low credit score, however how much the default was for and when it was registered will determine if a lender is available. Speaking to an experienced adviser to help you understand your bad credit mortgage options before you start viewing properties is advisable.

Depending upon the level of bad credit that your partner has will determine if there are shared ownership mortgage options available. There are lenders generally accessible through mortgage brokers who will consider providing mortgages to clients if they have bad credit registered against them such as missed payments, defaults and/or CCJ’s resulting in a low credit score. You should speak to a mortgage adviser to confirm your mortgage options and help you buy a home.

Shared ownership mortgages are not offered by every lender in the market, however the process of obtaining a shared ownership mortgage is similar to arranging a standard mortgage. A valuation will need to be done, affordability checks will be carried out and overall case due diligence will be completed by the mortgage adviser & lender. The shared ownership scheme is a great way to help people get on the property ladder.

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