The process of getting a mortgage can be very stressful with the need to find the right deal being critical, but for those who have bad credit it can feel hopeless at times.
The Right to Buy scheme is something that has been utilised by millions of people since it was first introduced in the 1980’s and since then additional changes have been made to the regulations in order to make it so that more people are eligible and have access to it.
What is a Right to Buy Mortgage?
This scheme was originally created to allow council tenants in England to purchase the homes they are living in at a discounted price and in 2015, this was extended to include housing association tenants (right to acquire) . This enables people who otherwise would not be able to afford it the chance to invest in property and get onto the housing ladder.
Who is The Scheme Available To?
Although the government will take into account various criteria when considering eligibility, in order to qualify for the Right to Buy it is usually expected that the following apply;
- You have been a tenant for at least 3 years.
- The property must be your main home.
- You do not live in sheltered housing.
- The property you live in is not scheduled for demolition.
- There are no outstanding possession orders against you.
Eligibility will need to be confirmed by the relevant council or housing association where additional checks may need to be carried out.
Can I Get a Right To Buy Mortgage If I Have Bad Credit?
As with most mortgages having a good credit score is always preferrable, however just because you have had credit issues in the past does not mean that you cannot successfully get a Right To Buy Mortgage. It will likely be more challenging to find the right deal but there are specialist lenders who will consider applications from those with adverse credit ratings.
What is The Process of Applying for a Right to Buy Mortgage If My Credit is Bad?
Buying a property can be a long process so working out your mortgage options early on can help you save time later in process.
- The first step is to always find out your credit history in order to ascertain early on if there is anything that might make the process more difficult.
- Check eligibility criteria to ensure that you are a suitable candidate.
- Work out the costs involved to give yourself an idea of what you can afford before getting further into the process.
- Complete an online application form (RTB1) or alternatively you can ask your landlord for a printed copy. Be sure to sign it and send it to the landlord recorded or signed for delivery so that you get a receipt and proof of postage.
- A landlord typically has around 4 weeks to respond confirming whether you do or do not have the Right to Buy..
- The landlord should then send you an offer notice called an S125 which sets out the value of the property, the discount, the price you will pay, notes of any structural issues and detailed terms and conditions. This should be received within 8 weeks for a house or within 12 weeks for leasehold properties. It is important to note that if you are not happy with the given valuation then you have the right to appeal.
- After receiving the offer, you have up to 12 weeks to accept it. You then need to organise for surveys to be done, arrange a mortgage and appoint a solicitor.
- For those who have a bad credit history it is worth consulting a finance or mortgage advisor that specialises in securing loans for people with adverse credit. They will have relationships with lenders who are more likely to consider Right to Buy Bad Credit for people with things such as CCJ’s, defaults, missed payments, IVA’s and even bankruptcy.
- Once you are happy with the terms set out by the landlord and have secured a mortgage then you can proceed with the purchase.
After that it’s just a matter of waiting until all of the paperwork is complete, and the legal formalities taken care of and then you are officially a homeowner!