What is the process of getting a shared ownership mortgage with bad credit?

Mortgage application form with a calculator and house.

For those struggling to get on the property ladder, there are a number of government backed schemes available to help make it more affordable.

The Shared Ownership Scheme, sometimes referred to as ‘Part Buy, Part Rent’ or ‘Share to Buy’ is one of the ways that people who cannot afford to buy on the open market get the chance to purchase a share in a new build or resale property.

  • What is a Shared Ownership Mortgage?

Aimed at helping first time buyers or previous homeowners who are currently unable to buy, the Shared Ownership scheme works by giving first time buyers or those that do not currently own a home, the chance to purchase a share in a new build or resales property, whilst continuing to pay rent on the remaining percentage.

Initially a buyer would be able to purchase between 25-75% of the property which they have a mortgage for and make payments towards. Rent is then paid each month to the housing association who own the remaining shares. If for example, a buyer was to purchase 25% of their property, they will continue to pay rent on the remaining 75%, paying a combination of mortgage and rent each month.

The benefit of this is that the buyers require a smaller deposit and don’t need to borrow as much for the mortgage which can make a significant difference in being able to afford and be accepted for a mortgage.

The buyers can then purchase additional percentages of the property over time which is known as ‘staircasing’, with the goal being that the buyer is eventually able to buy 100% of the property and own their home outright.

  • Can I Get a Shared Ownership Mortgage If I Have Bad Credit?

As with all types of borrowing and mortgages, lenders are less likely to accept people with an adverse credit score or an unfavourable credit history. However, there are a number of specialist lenders who are able to consider applicants for a Bad Credit Shared Ownership Mortgage and offer some great deals that will help them take the next step to owning their own home.

  • What is The Process of Getting a Shared Ownership Mortgage With Bad Credit?


Although the eligibility for a Shared Ownership Mortgage can vary across the UK, here is a typical run down of who it might be suitable for;

  • Those with a combined income of less than £80,000 who live outside of London and £90,000 living inside London.
  • First time buyers or those who have previously owned and can no longer afford to.
  • People with an existing mortgage under the Shared Ownership Scheme.
  • Those planning to live in the property in its entirety and not rent out any part of it.
  • Are 18 years of age or above.
  • Have the permanent right to live in the UK.

Asses Your Finances

It’s always important to manage your expectations and get your ducks in a row as early on as possible, even if you are worried about what you might find. Checking your credit score and credit file allows you to have a thorough understanding of your financial position and see what you might need to do to give yourself the best chance of being accepted for a mortgage.

Find a Property

There are lots of online resources out there to help buyers find a suitable property that is available on the shared ownership scheme including online property portals and the government Help to Buy: Shared Ownership website.

Get Advice From a Mortgage Advisor

A reliable shared ownership broker or mortgage advisor will be able to help answer any questions you may have and guide you through the application process. They will also be able to help calculate how much of a deposit you will need, how much you can afford to buy and have the relationships already in place with specialist lenders to find the right deal for you.

  • Deposit

One of the many appeals of the scheme is the low deposit that is required, although this can sometimes need to be increased slightly for those with bad credit in order to secure a deal, it is still substantially lower than with a normal mortgage.

  • Shares

The amount you decide to buy will depend on a number of things including your overall finances, the value of the property and how much you can afford. The larger the share, the larger the deposit and the larger the mortgage amount each month, so it is important to get the amount right.

  • Find a Lender

Your broker will be able to recommend the right lenders for your individual circumstances, help you avoid paying more than you need to and get you the best deal with affordable interest and fair terms and conditions.

Apply, Accept, Complete

When applying for a Shared Ownership mortgage a valuation will need to be done on the property, and the lender will need to fully underwrite your case by assessing all information and documents that have been provided. Once the lender has satisfied their underwriting they will issue a Mortgage Offer which are typically valid for 3 months, but can be extended. Once all legalities are taken care of, you will be able to exchange and complete.

Enjoy Your Home!

Once you have completed then your property is yours to enjoy!