All you need to know about getting a Right to Buy mortgage with a bad credit rating.
If you’re a council tenant in England, you might be considering the Right to Buy Scheme to purchase your home. Even if you have a bad credit, you may still be able to buy your council house with a Right to Buy mortgage.
In this Guide:
Yes, Right to Buy still exists. But it's only available if you live in England. You won't be eligible if you're in Scotland or Wales. The Right to Buy scheme still exists in Northern Ireland, but the maximum discount you’ll be eligible for is £24,000.
Right to Buy was set up by the UK government in the 1980s, and gives you the opportunity to buy your council home for a discounted price.
To qualify for the scheme, you need to meet the following criteria:
The property you want to buy is your only home
The property doesn't have any shared facilities with other households (like a flat with a communal bathroom or kitchen shared with others on your floor)
You've had a public sector landlord for three years (councils, armed forces, NHS trusts/NHS foundation trusts)
You're not currently in any legal battles with a creditor
The Right to Buy scheme offers a big discount on the price of buying your home. The maximum discount you can get through the Right to Buy scheme is £84,200 or £112,300 if you live in London. This is regardless of how long you have lived in your home, or how much it is worth.
You can read more about the Right to Buy scheme and apply on the government website.
They’re similar, but there is a difference between Right to Buy and Right to Acquire.
Right to Acquire is meant for housing association tenants. Right to Buy is for council tenants. If you were a council tenant when your home moved to housing association ownership, then you'll need the Right to Buy scheme.
For Right to Acquire, the maximum discount available is £16,000, and the discount you'll get depends on where you live. If you sell the property within five years of buying it, you'll need to pay back some or all of the discount you received. If you sell within 10 years, you'll need to offer it to your previous landlord or another local social landlord.
You can apply for the Right to Acquire scheme using the Right to Acquire application form.
Unless you can pay for it outright, if you want to buy your council house you’ll need to apply for a Right to Buy mortgage.
Buying your home through the Right to Buy mortgage scheme is similar to buying a property on the open market. You can also apply for a joint Right to Buy mortgage with another person.
If you’re thinking of buying your council or housing association home, you'll probably need advice from a specialist broker before starting a mortgage application. Someone who knows the market and has dealt with people just like you.
Our Mortgage Experts have lots of experience with Right to Buy mortgages. Start an enquiry with us to find out your options.
It depends on the lender, but most mortgage companies won’t require a deposit to give you a Right to Buy mortgage. Some will be willing to use the discount you received on your home as a deposit. However, some lenders might ask you to put down some cash up front (around 5-10% of the property value) regardless of the Right to Buy discount.
Because of this, the Right to Buy scheme is a good way to get on the property ladder if you have a low income or can't save a lot of money.
Yes, it’s possible to get a Right to Buy mortgage with bad credit. But it will be more difficult than if you had an ‘Excellent’ or ‘Good’ credit score. Bad credit is a term used if you have a low credit score. It can be caused if you’ve had any issues in the past with repaying credit cards, utility bills, a mortgage or any missing payments on any of your bills.
Once your landlord has agreed to sell your council home to you, the Right to Buy mortgage application process is basically the same as it would be if you were buying a house on the open market.
Mortgage lenders will look at your credit history when you apply for a Right to Buy mortgage. Issues like CCJs or defaults will be more concerning to a lender than missed or late payments.
Lenders will also look at the circumstances around your credit issues, like how much money was involved and how long ago it took place. You can get an idea of how much you could borrow on a mortgage with our Bad Credit Calculator
What causes bad credit?
Having no credit history
If you don’t have a credit history, credit reference agencies have no way of judging your creditworthiness.
Not sticking to your credit agreements
Mortgage lenders want to know you're trustworthy. Missed payments, late payments, or paying less than the minimum balance all goes on your credit report.
Unsurprisingly, being declared bankrupt really affects your credit score, and will stay on your credit report for six years.
Choosing the wrong credit card for you
A credit card can either improve or ruin your credit rating, so you need to choose wisely. You should go for a card with a limited credit limit and interest rates you can handle.
Having a CCJ
A County Court Judgement (CCJ) is a type of court order in England, Wales and Northern Ireland. A CCJ will be registered against you if you fail to repay money you owe, and will stay on your credit record for six years.
Being a victim of identity theft
It's not nice, but identity theft happens. Fraudsters don’t care about your perfect credit rating and will run up huge bills and damage your credit score. Secure online banking can also be risky. Make sure to regularly monitor your banking transactions and quickly cancel your credit cards if you see anything suspicious.
Only paying the minimum each month
It can be tempting, but you should avoid paying off the bare minimum when it comes to your credit card. If you can, try paying a set amount. This will mean you spend less on interest and improve your credit score.
Being in an IVA
An Individual Voluntary Arrangement (IVA) is a repayment agreement made between a borrower and a lender when they're unable to pay their debts. Details of your IVA will stay on a public register for the length of the IVA. They will be removed three months after the IVA has ended.
For more definitions of different financial and mortgage-related terms, check out our glossary.
If you're confused about your credit score, read our Guide: What is a Bad Credit Score
If you want to apply for a Right to Buy mortgage but are worried about your score, read our Guide: How to Improve Your Credit Score Before You Apply For a Mortgage
Right here! Some banks and mortgage brokers aren’t experienced at helping people who want a Right to Buy mortgage with bad credit. Automated online mortgage advisors can’t judge for themselves. It’s a case of: Bad credit = Computer says ‘No’.
Unlike others, we’re experienced in all kinds of bad credit mortgages, Right to Buy mortgages included. Our friendly Mortgage Experts are up for the challenge, and has a proven track record of making bad credit mortgages possible for people like you. Get started.
Our Mortgage Experts are fully-qualified with experience in bad credit, self-employed and complex mortgages. They have a proven track record of getting mortgages for people who’ve been rejected elsewhere.
Applying for a mortgage or understanding your options shouldn't be confusing, yet there are just so many myths doing the rounds and it's not easy to know where to turn to get the right advice.
Our calculators give you an idea of what you might be able to borrow, what's affordable and a rough estimate of the kind of property prices you can start to look at.
Talk to our Mortgage Experts to find out your options