The right to buy was a scheme first introduced in 1980 and allow council tenants to purchase their rented homes at a reduced price so they can become homeowners.
Owning your own property has many benefits, better financial security as well as being able to pass down the property to your children are often mentioned by borrowers that are keen to purchase instead of continuing to rent from the local authority.
You are able to purchase your council home providing you meet the following criteria:
You will need to be a council tenant for a minimum of 3 years if you rent a flat or 5 years if you rent a house. If you are keen to own the property instead of just renting this scheme could be perfect for you.
Although both Right to Buy and Right to Acquire are housing schemes that allow tenants of social housing to purchase their homes there are some key differences to understand.
Right to Buy: This scheme is aimed towards council tenants who are offered the opportunity to purchase their home with substantial discounts.
Right to Acquire: This scheme is offered to tenants renting from Housing Associations. The properties are managed and owned by registered social landlords and whilst they do still offer discounts they are not as generous as Right to Buy, with a cap set at £16,000.
If you have bad credit and looking to purchase under the Right To acquire scheme you will likely find it more difficult as there are a lot less lenders offering Right to Acquire mortgages and the lenders that do will require you to substantially contribute towards to the deposit as the discount is capped at £16,000
Nobody knows how much longer the scheme will continue to be offered to council tenants due to reduced social housing stocks as well as the pressures the governments face to end the scheme. The Right to Buy scheme in Scotland ended in July 2016, and in Wales it finished in January 2019.
If you live in a council property and qualify for the Right to Buy scheme and have desires to buy your home from the council then our advice is simple, act now if you can before it’s too late because there is a change in government policy.
Buying your council home can be a very attractive proposition as the discounts which can be awarded are substantial and can be as high as £96,010 for a house or a flat outside of London and as much as £127,940 within the London boroughs.
If you sell your council home within 5 years of purchasing, you will need to pay back some or all the discount which you had received if you sell within the first 12 months. The exact amount will depend on how long you have owned the property for.
Also, even when your 5-year discount period has ended you must still offer the property back to the council or housing association before you are able to put the property on the open market if you have owned it for less than 10 years.
It is likely in most cases that you will not have to use your own funds to add to the deposit due to the discount being substantial. Most lender will accept the discount used as a 100% source of deposit.
Absolutely! If you have bad credit and looking to buy your council home, then the Right to Buy scheme could be perfect for you as the discount awarded to you will enable you to have a substantial discount to support your application.
Depending on the level of adverse showing on your credit file could mean your application may need to be submitted to a specialist lender but the good news is there are plenty of lenders will accept your application even with bad credit.
Valuation fees – Even though the council would have provided you with a valuation for the property when granting your Right to Buy offer, the lender will still want to instruct their own surveyor to attend the property to ensure it meets their property criteria, is in good condition and worth the money you are paying for it.
Estimated costs – Free to £500
Solicitors’ fees – You will need to instruct a solicitor to act both for you and the lender to ensure all conditions of the mortgage are met. They will also be responsible for registering you as the owner at land registry.
Costs can vary greatly depending on which council you are buying from and which lender you are applying for a mortgage with. All lenders will have the own their own unique requirements which they will expect to be undertaken and completed before you can draw down the funds to pay the lender.
Estimated costs £1,200 – £2,000
We always recommend working with a mortgage advisor which understands the scheme so is best placed to advise & support you accordingly. If you also have bad credit, then work closely with a specialist bad credit mortgage advisor such as ourselves as we understand which lenders will consider your application and what is required to ensure you receive the best possible mortgage for your circumstances.
Estimated costs Free – £1,995 depending on the complexities of the case and how many hours are required to secure you a binding mortgage offer.
If you would like to understand more about the Right to Buy scheme or if you would like to get the ball rolling contact us today on 01268 294 777 to find out what are the best options are available for you
If you have questions about getting a mortgage with an adverse credit score, read our FAQs. Our wealth of knowledge within this market means that we’re confident in our ability to offer specialist mortgage advice and secure the mortgage you want regardless of your credit history.
A Right to Buy mortgage is a type of mortgage designed for council tenants who have the legal right to purchase their rented home, often at a greatly discounted price. The scheme allows council tenants who want to buy their rented home to borrow money to purchase the property, similar to other mortgages.
To qualify, tenants must meet specific government criteria, including having been a council tenant for a certain period, the property's value, and receiving a Right to Buy offer proposal from their local council.
Getting a Right to Buy mortgage while on benefits is possible but might be harder. Lenders consider your ability to repay based on your income, which includes benefits. However, some lenders might have specific rules about which benefits they accept.
It's essential for tenants considering a Right to Buy mortgage to carefully assess their financial situation, to ensure they can afford the mortgage repayments and any associated costs, such as maintenance and insurance, before proceeding with the purchase.
Our mortgage advisers can talk you through your options and find lenders willing to work with you.
Getting a Right to Buy mortgage with bad credit is often much easier than applying for a standard mortgage with bad credit, the reason for this is the Right to Buy discount which can be as much as 50% of the property value can be used as your deposit.
This means you will have a very large deposit to support your Right to Buy mortgage application. Lenders will check your credit history and income.
We can provide you with advice that will improve your chances.
Yes, you can get a Right to Buy mortgage with bad credit, and the good news is you will be able to use your discount as your deposit which often means your deposit will be substantial giving you access to the lenders lowest interest rates for the scheme.
The biggest obstacle you will face is that made credit lenders will have stricter policies on property types which can often rule out ex local authority properties due to the construction type, quite often houses especially those built in the 60’s may have been built using concrete.
Finding bad credit lenders willing to lend on apartments/flats can also be challenging, and the lack of lenders offer Right to Buy with bad credit can often lead to paying higher interest rates.
We know the lenders that specialise in bad credit mortgages and understand the options that will be available to you in your situation. Speaking to us first can increase your chances of finding a suitable mortgage option.
In most cases you will not need to use any of your own funds as the discount offered to you by the council for the Right to Buy scheme is often substantial and can be as high as 50% of the property value, this discount can be used as your source of deposit.
This is hugely beneficial for people with bad credit as raising a sufficient deposit to support an application with bad credit can often be the main sticking point.
Check with our specialists to understand the exact deposit needed in your situation.
Here are simple steps to get a Right to Buy mortgage with bad credit:
Following these steps can improve your chances of getting a Right to Buy mortgage with bad credit.
Here at Adverse Mortgage Advisors, we understand your situation and the requirements of the lenders so we can help you to understand what is necessary to secure you the best mortgage for your circumstances.
