Are shared ownership mortgages with bad credit more expensive?

Shared ownership mortgages for people with bad credit will cost more compared to those with good credit. Here’s why:

  1. Higher Interest Rates: Lenders often charge higher interest rates to those with bad credit to cover the risk of default. So, even though shared ownership mortgages usually have lower deposit requirements and monthly payments, the interest rates for those with bad credit could be higher, making the overall cost of the mortgage go up.
  2. Fewer Lender Choices: There are very few lenders that offer Shared Ownership mortgages to People with bad credit. With less competition, interest rates and fees could be higher because borrowers have fewer opportunities to find better deals.
  3. Extra Fees: Some lenders may add extra charges for shared ownership mortgages with bad credit, like higher arrangement fees or application fees. These additional costs can add to the total expense of the mortgage.
  4. Bigger Deposit Needed: While shared ownership mortgages often need smaller deposits than regular ones, people with bad credit may still have to put down a larger deposit to reduce the lender’s risk. This means more money upfront, increasing the overall cost of the mortgage.

Overall, shared ownership mortgages for those with bad credit might be more expensive due to higher interest rates, fewer lender options, extra fees, and possibly bigger deposit requirements. Borrowers in this situation must think carefully, that’s why our broker will help you compare offers, and find the most affordable solution for your circumstances.

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