Rent and Buy Property Purchase
Due to high property costs and the high deposits now required from lenders these types of loan have become a popular alternative to a standard purchase.
A shared ownership mortgage potentially may be a way to get a person on a lower income onto the housing ladder as UK house prices are so high and income multiples do not marry up.
The system works by the borrower taking out a mortgage as a percentage of the ownership say typically 50% share and the local housing association will own the other share. Many high street lenders may cater for this type of mortgage. The housing authority may allow the option to the borrower to increase the amount of share they own called staircasing so that they are able to own the home out right.
The Housing Association may charge rent for the remainder of the share normally at around 3% to keep the over all costs to the borrower low. The government have been keen to encourage this scheme as it is an excellent way to get key workers in the right locations. The building insurance may be set up by the the Housing Association.
Some lenders may take on this type of mortgage with bad credit or poor credit score and lower than 50% share though these would be adverse specialist lenders whom will charge a higher interest rate and have long, high early repayment charges. They may consider county court judgments (CCJ), defaults, missed payments, arrears, IVA and bankruptcy. However self cert is not applicable to shared ownership. Mortgage completion after the mortgage offer can often be lengthy due the involved and extra legal work inherent with this type of mortgage.