Rent
and Buy Property 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.
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