Shared ownership help!

[Lulabellex]

To try and cut a long and complicated story short, I’m about to come into some inheritance (around 40k). In an ideal world I’d like to use this to get onto the property ladder however my credit score is awful due to being in an abusive relationship and my ex taking out credit in my name which he then didn’t pay for so I don’t stand a chance at getting a mortgage.

I was wondering instead, as a way to get my foot on the property ladder, whether I could use the 40k to purchase say a 30% share in a shared ownership property outright rather than mortgage it then when my credit score improves in a few years time, purchase more shares of the property via a mortgage.

I’m trying to read up on the rules and t&c’s online however I’m a tad confused so thought I’d post here for someone more knowledgeable to come along 😊

The different schemes have different rules you need to approach your local ones and ask.

I think most do allow this.

I've got a shared ownership property.. and not amazing credit! But I was declined many times by the housing associations until my credit score was over 750 on Experian. This was for Hyde, Urban Moves, and Clarion.

Worked really hard and managed to get it to 751! And a lovely home now.

So the mortgage side wasn't the issue, it was passing the rent checks.

Yes, you might be able to. It's not uncommon to use cash rather than a mortgage to purchase a share in a shared ownership property. The housing association will want to ensure that you've got enough income to pay the rent on the unsold share. I think £40k will only be enough to get shared ownership if you live somewhere reasonably cheap though.

I live in a relatively cheap area up north so could definitely get a 25-30% share up here for 40kish

Oh dear I hadn’t even factored in rent checks , my score on Experian is only 346 😥I earn 30k so could easily afford the rent and could provide references to show I’ve never missed a rent payment but maybe that’s going to be a problem too!

OP could you possibly look at buying outright with your deposit and speak to a broker and see what they can do. There is mortgage companys out there that accept bad credit. Have a look at Pepper Money. They've helped a friend who had a CCJ and 2 defaults.

I did consider that, my credit is very bad though unfortunately- I think I’m beyond help. No CCJ’s but 13 defaults and 21 missed payments in the last 3 years. I’m getting on top of things now and there’s been no missed payments in 6 months and payment plans have been set up but unfortunately by the time I came to my senses and managed to leave my previous relationship the damage had already been done.

I could kick myself really, I feel like I’m going to be paying for my poor mistakes for the rest of my life

I did exactly this. It’s been ideal for me. I don’t know if they checked credit score (mine is only average, not great), but I remember giving lots of payslips and evidence of how I would budget each month.

Housing association checks on rental affordability aren't so strict. You can explain the situation and the reason for the bad credit score, they should be sympathetic. They will mainly want to be sure you can afford the rent, but on £30k and in a reasonably cheap part of the country you should be ok.

Should be fine. Housing associations (as opposed to lenders) are interested in your outgoings, not your credit report.

In a few years (5 to 7) you would hopefully be able to take your share plus your percentage of any equity and buy on the open market.

I'm not familiar with shared ownership. Is this the kind of deal where you buy part and rent part but are responsible for the maintenance for 100%? If so, then run - run fast and don't look back.

I am familiar with it via my job, and it's a useful scheme, better than the OP spending the money on 4 years of rent.

Better for who?

You tell me, with your self-confessed vast knowledge.

As I said, I'm unfamiliar with the scheme. Have I summarised it correctly? If not then say so. But in any case, explain why this is a good deal and not just a way to prop up builder prices.

It gives security that renting doesn't. Yes you are liable for repairs etc but we've done shared ownership on a new build so benefit from the 10 year warranties. I would be much less likely to buy a share in an older house due to repair/maintenance costs.

I'm clearly biased against schemes concocted by the debt pushing/dealing cabal, that have helped sustain high house prices. So here is a balance article on the subject. Pay attention to the section "Will I be trapped if house prices fall?"

https://www.theguardian.com/money/2022/sep/10/shared-ownership-cost-buy-home-property

Less than 40% shared ownership is rare so it may take some time for you to find somewhere but persevere because there will be something come up at some point. I am in a similar position to you in that I have some funds that I want to invest on property for me and my family but I don’t earn enough for a full mortgage on my own and while my credit score is great, my partners in in default and very poor.
I hope it all works out for you and you find a home xx