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In short, the answer is yes, you may be able to buy a Shared Ownership home with bad credit. However, it depends on your circumstances. Your options will also be altered depending on the type of credit problem, when it happened, and how you have managed your finances since.
If you are worried about your credit history, understanding the checks involved is a helpful first step.
Shared Ownership allows you to buy a share of a home and pay rent on the remaining share. As your deposit is usually based on the share you purchase, it can make the initial cost of buying more manageable.
However, a smaller deposit does not mean that credit checks disappear. There are two separate decisions:
In England, the general household income limit to purchase a Shared Ownership is £80,000, or £90,000 in London. You must also be unable to afford a suitable home through a full purchase. Other eligibility conditions apply, too, so it’s best to check the government’s Shared Ownership criteria.
Lenders tend to look beyond the score shown in a credit-checking app as they want to understand whether you are likely to keep up with repayments over the mortgage term.
Their assessment can consider:
It’s important to note that lenders offering Shared Ownership mortgages have different criteria. Where adverse credit is accepted, you may face a higher interest rate or need a larger deposit. A broker can help establish which options, if any, fit your circumstances.
“Bad credit”, also known as adverse credit, describes a financial history that may make a lender more cautious about offering a mortgage.
Common examples include:
Remember: Having little credit history is different from having missed repayments. However, it can still leave lenders with less evidence to see how you might manage borrowing from them.
If you have “bad credit”, all may not be lost. There are ways to improve your chances of approval, but you need to understand what needs attention before applying for a mortgage.
Review your reports for incorrect addresses, unfamiliar accounts, and payments wrongly marked as missed. If you spot any, raise these errors with the relevant credit reference agency.
Checking your own report does not damage your score.
Keep payments up to date. If you struggle to remember payment dates, consider Direct Debits to avoid missed due dates. You should also register on the electoral roll at your current address if you are eligible, as having accurate details and reliable payments help build a clearer financial record.
Several applications close together can leave multiple hard searches on your report. Ask whether an initial eligibility check uses a soft search before proceeding.
Have evidence of your deposit, earnings, regular spending, and existing commitments ready. Try to also include documents showing when previous debts were settled.
A larger deposit may reduce the amount you need to borrow, but it cannot override a lender’s credit rules. It’s a good idea to also keep money aside for legal fees and moving costs, too.
Your mortgage payment is only part of the picture. You need to also consider rent on the remaining share, service charges, household bills, and any maintenance costs you will be responsible for.
For example, a 5% deposit on a £60,000 share would be £3,000. This is an illustration, not a mortgage offer: your required deposit could be higher, and you would still need to afford the other costs.
A mortgage broker, experienced in both Shared Ownership and adverse credit, can help you understand whether an application is realistic.
They can:
It’s important to note that not every lender that accepts bad credit offers Shared Ownership mortgages. Ask the broker about their experience with both Shared Ownership and bad credit, which lenders they can access, and what they charge.
If buying now is not realistic, there may still be a way to work towards home ownership.
Rent to Buy offers eligible customers a reduced rent to help them save towards a future deposit. However, it involves affordability and credit checks, so it is not an automatic alternative if a mortgage application has been declined. Explore our Rent to Buy information to understand the requirements.
Continuing to rent while preparing to buy can give you time to address outstanding issues and build savings. The right waiting period depends on your circumstances.
Alternatively, buying a share without a mortgage may be possible if you have sufficient funds and meet the relevant criteria.
A little preparation can prevent unnecessary setbacks:
Our first-time buyer timeline explains how the mortgage application fits into the wider buying process.
Credit worries can make buying a home feel further away, but finding out where you stand can help you plan.
Our team can explain our Shared Ownership application process and the financial assessment involved. Contact Plumlife to discuss your circumstances and explore your next steps.
Unfortunately, there’s no single minimum score used by every lender. Credit reference agencies use different scoring systems, while lenders apply their own criteria. The information in your credit report matters more than aiming for one particular number.
Possibly, but your choice of lenders may be limited, meaning that some may require a larger deposit where there are credit concerns.
Remember: Meeting a provider’s minimum deposit requirement does not guarantee that a lender will accept the application.
It depends on the CCJ’s age, value, and payment status, as well as the provider’s and lender’s rules.
No. Paying it updates its status, but an accurate default generally remains on your report for six years from the default date. Settling it may help your application, depending on the lender’s criteria.
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