Can I get a shared ownership mortgage with bad credit?

Purchasing a property is a big challenge. In that case, if you are struggling with a poor credit situation, the first stress is regarding the mortgage. However, as a solution to this, sharing ownership mortgage with bad credit is working as a better option. However, the question is the same: how can I get a shared ownership mortgage with bad credit? There are ways through which you can qualify for a mortgage despite having bad credit. This option is mostly available to low-income buyers or first-time buyers.

What is shared ownership?

Shared ownership is a system of property purchase in which the buyer purchases a specific percentage of the property. This percentage can be from 10% to 75%. He pays rent for the remaining portion. The remaining part of the property is owned by the Housing Commission or local council. This makes it easier for low-income or first-time buyers to purchase property.

What is bad credit?

A bad credit situation is called when your credit rating is low. This credit score goes down due to some of the following circumstances.

• County Court Judgement
• Late missed payments,
• Bankruptcy
• Defaults,
• Individual voluntary arrangement,
• Debt management

The credit history is used to assess your payment capacity. However, if the credit history is related to many types of financial issues, it can be a challenge to prove that you are a financially responsible individual.

This is the reason why, most of the time, there is difficulty in choosing the right mortgage deal. However, with liberal direct lending, you can take a loan even in a bad credit situation. But the affordability factor is also important here.

You must show your latest 1 to 2 years of stable income. Timely paid bills and regular earnings are two important factors through which you get approval.

Can I get a shared ownership mortgage with bad credit?

Yes, it is possible to get a shared ownership mortgage even with bad credit, but it can be challenging. However, there are some specialist lenders like Shinemortgage that can help you get relevant mortgage deals.

For this, you need to keep a few factors in mind. While approving a shared ownership mortgage, a few factors play an important role.

• First is the age or duration of your credit issues. In case of recent issues like missed payments, your situation can be more problematic if you defaulted years ago. In that case, granting you a mortgage at the current time may not be as difficult. Lenders generally prefer applicants who have a history of credit issues. But at the present time, the borrower is behaving financially responsibly.
• Your current financial stability. If, at present, you have a regular life, your money management is good. For example, if you are paying bills and rent on time, then it becomes quite easy to qualify for a mortgage.
• The type of credit issues is important. Some types are considered more serious, such as bankruptcy being a serious issue. Missed payment of utility bills is not considered as serious as bankruptcy. That is why lenders assess your repayment capacity by looking at the type of credit issue. The mortgage is offered as per the nature of your credit problems.
• The size of your deposit also affects your chances of getting a loan. 5 to 10% of the property price has to be paid as a deposit. In a situation of bad credit, the higher your deposit, the better your chances of getting approval.
• Another factor is employment and income status. It is important to see what your employment type is. Some special or certain types of employment types are considered risky. For example, real estate is considered a risky industry. In such a situation, if a person working in this sector has to take a loan for the property, then the mortgage amount may be affected. Your approval chances are increased if you work in a promising sector like medicine. However, income consistency is an important factor in that situation, too.

Tips to improve approval chances with a bad credit situation

You can easily qualify for a shared ownership mortgage despite your credit rating. For that, you have to follow the proportions given below.

• First is to check your credit report. Apply for a loan only after checking your credit report properly. There may be some wrong information mistakenly mentioned in your records, some error or outdated information. It is important to rectify it at the right time and give an error-free report to the lender.
• Second, avoid new credit applications. Do not apply for any new loan before applying for a mortgage. Your income and debt can affect your loan. However, first-time borrowers think they already have no credit history. But the fact is, with their already limited history, it is difficult for the lender to prove their repayment capacity. A new loan application with a mortgage can affect your mortgage amount.
• The third point is to keep track of outstanding debt. Whenever you apply for a property loan, try to pay off at least small loans beforehand. The low-interest debts can be easy to pay. By reducing your debt-to-income ratio, you can improve your mortgage profile.
• The fifth point is to work with a specialist mortgage lender. If you want to get the best deal on this loan, it is important to choose a specialist. Shinemortgage offers bad credit shared ownership mortgages. We specifically deal in these products, which gives you proper attention and important tips to get a mortgage.
• The sixth point is to try to gather a bigger deposit. The bigger your deposit amount, the easier it will be for you to get a mortgage. Therefore, it is better that you start calculating the amount for the deposit even before searching for the property.

Conclusion

Shared ownership and mortgage with bad credit are practically possible. For that, you have to strengthen your repayment capacity. It is important to remember that credit issues in recent times have increased your approval chances. At the same time, credit issues in history do not present a big concern for you.

For property purchase, you have to first search for the property. If you start working on your finances before that, then it will be easy for you to apply for a mortgage. During that time, work on your finances and get approval.

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