If you are looking to buy on the shared ownership scheme and need up to a 100% shared ownership mortgage, then there may just be a solution for you. Unlike many estate agent advisers, banks or other institutions that claim to have a scope of the market, the advisers we work with are professional mortgage brokers and can arrange mortgages with any UK lender.
Shared ownership explained
Shared ownership properties, as well as other low cost home ownership schemes, have become increasingly common over the last few years as developers attempt to assist buyers in making their ideal home more affordable. Nationwide, shared ownership is becoming very popular because it is often possible to buy without a deposit.
What is shared ownership?
Shared ownership allows a person to purchase a share in their home even if they cannot afford a mortgage on the whole of the current value. It is generally used in affordable housing, providing a “third way” of land tenure between home ownership and renting. The purchaser buys a share of the property, say 50% for example, and the remaining equity share may be held by the house builder, by a private investor or by a landlord such as a housing association. In most instances the resident pays rent on that share.
How does shared ownership work?
Also known as ‘part buy part rent’, shared ownership properties involve the purchaser buying a share of the property with a mortgage and renting the rest from the developer. It’s also possible to buy a property through your local housing association shared ownership scheme. You can buy as little as 25% up to 100%, depending on the organisation selling the property. Typically, shares are bought as either 25%, 50% or 75% ownership.
Will I qualify?
Finding the right shared ownership property is just the first step, getting the mortgage for shared ownership is vital. In today’s market, every lender has a different stance on how they lend their money, and to whom. Typically though, the criteria for shared ownership property seems to be the most flexible in the market in terms of lending high loan to values to people with bad credit and other problems in the past. You need to have the income to show you can afford the mortgage and rental payments, and to come up with enough deposit that your lender requires.
Self-employed shared ownership
Shared ownership mortgages for self-employed applicants do exist, although it can be a puzzle establishing which lenders accept self-employed applicants and also accept shared ownership. If you only have one year’s accounts for instance, the options available are limited, so there may only be one or two lenders considering these mortgage applications. If you have 2 or 3 years’ self-employed accounts then obtaining a shared ownership mortgage is more straightforward as there are a larger number of lenders that will consider an application on this basis.
Shared ownership mortgages with bad credit
One of the most exciting developments in the mortgage market over the last year or so has been the increasing willingness of lenders to consider customers who have previously found it impossible to get a mortgage. With some lenders, even customers who think they have no chance are being considered and approved.
Usually, if you’ve had bad credit history in the last 2 or 3 years, it is very difficult if not impossible to obtain any sort of mortgage at high loan to value ratios (over 85% borrowing/under 15% deposit) – only those who have a much greater deposit or equity can borrow with a poor credit history. Expect to pay a higher rate if this is you, as all lending is based on risk and bad credit with no deposit is not the most attractive proposition for a lender.
For this reason it’s important that, whatever your credit history, you speak to an adviser to see what’s possible for you. Get in contact with The Mortgage Hut today and see how we can help you.