Right To Buy Mortgage Bad Credit 

What is the Right to Buy scheme?

If you’re a local authority tenant, the Right to Buy scheme may allow you to buy your council home at a discount. At the current time, it is only available on council housing (both houses and flats) in England, and properties are offered at a discount on the current market value, based on how long you’ve been a tenant.

However, this is not necessarily only at your current property, and they will also look at other periods of council tenancy and provide a discount based on a cumulative total tenancy length.

Can I get a Right To Buy Mortgage With Bad Credit?

It’s absolutely possible to secure a Right to Buy mortgage with Bad Credit, although like other types of mortgage, this will depend on the severity, size and age of the debt. What can be a helpful factor with this particular mortgage type, however, is that the large discount greatly reduces the risk involved in lending, meaning that mortgage lenders may be slightly more flexible about their Bad Credit criteria. 

Of course, IVAs (Individual Voluntary Arrangement), Bankruptcy, and Repossession Orders can still be an issue, and if your level of debt is this severe, it’s less likely that you’ll be successful until a certain number of years have passed your credit issues. There are a handful of lenders that don’t conduct credit checks and look at your financial circumstances in a more holistic way, which may mean they are willing to lend to those at the more severe end of the Bad Credit spectrum.

If you have missed or late payments, Defaults, CCJs (County Court Judgments) or a DMP (Debt Management Plan) on your file there are specialist Bad Credit lenders that should be able to help you, and you may even secure a high street mortgage with minimal issues such as one or two late payments.

How Do I Know If I Have Bad Credit?

Certain levels of Bad Credit will be apparent as you will usually be informed of credit infractions by official letter. That said, if you’re unsure about the state of your credit file, it’s very simple to request a credit report online from any of the credit reference agencies, or from a company like Check My File, which will show you a cumulative picture of the information held about you by all credit referencing agencies.

How Do I Improve My Credit Score?

Your actual credit rating in terms of a numerical value is not something to get too hung up on, especially considering each credit referencing agency uses its own score matrix, so what is considered high with one, could be mediocre or low with another.

Improving your overall credit record, however, is certainly a good idea before any mortgage application. Here are some simple tips to prepare you:

• Check your file for accuracy and ask credit agencies to either rectify, or in some cases, even add notes of explanation to certain marks on your file. For example, they may be willing to explain that a postal strike directly led to your late payment with evidence.
• Ensure you appear on the electoral roll at your current address
• Remove old addresses and financial links (ex-partners etc) from your file and close disused accounts
• Repay any outstanding debts
• Don’t extend your borrowing beyond 50% of your credit allowance – so if you have a £5,000 credit card, try to keep the balance below £2,500.

Do I Need A Deposit For A Right To Buy Mortgage?

You won’t always need a deposit for this type of mortgage, as under typical circumstances, some lenders will be willing to consider the Right to Buy discount as your investment in the property, in the same way that equity can be used during a remortgage.

That said, if you’re able to offer a cash deposit on top of your discount, this will give you access to more lenders and better rates of interest. This will particularly be the case if you have Bad Credit, as a further deposit could be required in this case anyway.

How Can A Mortgage Broker Help?

If you have a poor credit history, a Right to Buy mortgage may be easier to obtain than a Standard Residential Mortgage, simply due to the lower level of borrowing. That said, there are often only specialist lenders available in this niche of lending, and a mortgage broker like ourselves will be best placed to help you access them, as they don’t often deal directly with the public.

We will be able to assess your circumstances against the criteria of every lender in the market, ensuring you get the most suitable mortgage deal available to you.

Approved by The Openwork Partnership on 25/09/2023