Right to Buy Mortgages with Bad Credit
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The Right to Buy scheme was first introduced in 1980, and it has since helped millions of council tenants to purchase their rented properties – including people with bad credit. The Right to Buy scheme helps eligible council tenants to buy their homes with a discount of up to £84,200 across England and in London Boroughs, it is £112,300.
As expert Right to Buy mortgage brokers for people with bad credit, we help clients to access an exclusive range of products from specialist lenders. Owning a home is a dream for most tenants. If you are a council tenant, the Right to Buy mortgage scheme gives you the possibility to buy the property you live in at a heavy discount. In this article, we’re going to explain the existing rules and how to adhere to the scheme.
What is the Right to Buy Scheme?
The Right to Buy scheme is a Government scheme introduced through the Housing Act 1980 by Margaret Thatcher that allows council tenants to buy their property at a discount. This discount is often accepted as a deposit by lenders, giving you easier access to a mortgage if you do not have enough savings to pay for any upfront costs.
This scheme is fully available in England, but it has been abolished completely in Scotland. Wales is also abolishing it, while if you are in Northern Ireland, you can only get a maximum discount of £24,000, depending on how long you have lived in the property.
If you live in England, you must comply with the following rules to adhere to the Right to Buy:
- This must be your main home
- The home must be self-contained
- There must be a legal tenancy contract between you and the council
- You have had a public sector landlord for at least three years
Joint applications are accepted if you apply with someone who shares your tenancy or with a family member that has lived with you for at least 12 months if they do not share the tenancy.
How much is the discount?
How much discount you can get depends on whether you are renting a house or a flat, as well as for how long you have lived there.
- If you have lived in a house for three to five years, you can get up to 35% discount. This amount goes up with 1% for each additional year you lived there, up to a maximum of 70% or £84,200 across England (£112,300 in London), whichever is lower.
- If you have lived in a flat for three to five years, you can get up to 50% of the discount, which goes up by 2% for each additional year up to the maximum threshold indicated above.
Can I qualify for the scheme if I have bad credit?
If you have bad credit problems, or you have a bad credit history, then it could affect your application for a Right to Buy mortgage. However, with the help of The Money Hub, we can help you to give yourself the best chance of having your application accepted.
How do I get the Right to Buy Mortgage scheme?
To adhere to the Right to Buy scheme, you must fill in the RTB1 notice and send it to your landlord. They must respond in 4 weeks and give you a reason why they do not want to sell if the answer is negative.
- If they agree to sell, the landlord must send you an offer within 8 weeks for freehold and 12 weeks for a leasehold property.
- The offer must contain the selling price and discount, as well as a description of the property, any known problems with the property, and estimates of any charges.
- You must respond within 12 weeks and either accept the offer or ask for an independent valuation if you don’t agree with the terms.
Once the council has confirmed the terms of your ‘Right to Buy’ you can apply for a mortgage to any bank or building society; most lenders will accept the discount as a deposit, but you will have to comply with the lender’s conditions regarding income and credit checks to get the money.
Can I qualify or the scheme if I have bad credit?
If you have bad credit problems, or you have a bad credit history, then it could affect your application for a Right to Buy mortgage. However, with the help of The Money Hub, we can help you to give yourself the best chance of having your application accepted.
What are my chances of being accepted for a Right to Buy Mortgage with bad credit?
As specialist lenders in the industry, we are able to deal with applicants who have a bad credit history. Even if you have been turned down by high street banks or building societies in the past, it is still possible that you can secure a Right to Buy mortgage. Our specialist panel of lenders will be able to assess your affordability and credit history, and provide you with relevant information on suitable products for you.
Contact the Right to Buy Mortgage experts today
If you are unable to get a mortgage from the high street lenders due to bad credit such as missed payments, defaults or County Court Judgements (CCJ’s), we have lenders who are willing to lend to clients. The main considerations for bad credit right to buy mortgages is affordability and the bad credit must be over 12 months ago.
For mortgage advice on Right to Buy mortgages please complete the contact form and an adviser will give you a call to discuss further.
Here is some additional information on related topics from our blog:
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Right to Buy FAQ’s
This is where the council allows a tenant to purchase the property that they live it at a discount. This discount can be used as a deposit when applying for a mortgage. The amount of the discount will depend upon many factors such is how long you have been a tenant for and whether the property is a flat or a house. You can visit the governments Right to Buy Calculator to give you a guide on what discount you may qualify for.
Yes – Some lenders will lend you 100% of the discounted purchase price. Each lender will have a different criteria that you have to qualify for, so you should speak to an experienced broker in this area. It is also worth noting that when buying a property you will need to have additional funds to pay for set up costs such as a valuation fee, mortgage broker fees, and conveyancing fees.
The council will value the property and confirm the amount of discount that you are entitled to. Let’s say for example the property valuation is £100,000 and you are entitled to a £20,000 discount, you can use this discount as a deposit and therefore get a mortgage for £80,000. The first step is visit the governments Right to Buy calculator to get an idea of the potential discount and then speak to a mortgage broker to explore your mortgage options. If a mortgage is possible and you wish to proceed, you will need to complete the Right to Buy Application Form to start the process.
There are lenders in the market who will consider helping clients buy their council property even if they have a CCJ registered on their credit profile. The availability of mortgages will depend upon when the CCJ was registered and how much it was for.
Most lenders will lend you up to 100% of the purchase price, so therefore no deposit is required by you. If you have a good credit profile there are a few lenders who will consider lending you extra above the purchase price to pay for some home improvements.
If you have a good credit profile there are a few high street lenders that will consider lending you extra money above the purchase price to fund home improvements. If you have a low credit score &/or bad credit registered the max you can borrow is 100% of the purchase price.
