Right to Buy Mortgages with Bad Credit

Get matched for a mortgage with bad credit under the Right to Buy scheme. Specialist brokers can help you navigate the process

Do you have any adverse credit that you know of?

Home Right To Buy Mortgages Right To Buy Mortgages With Bad Credit

We’ll look at whether it’s possible to get a Right to Buy (RTB) mortgage with bad credit, and in what instances lenders may accept your application and, therefore, how you should apply.

Can you get a Right to Buy mortgage with bad credit?

Yes, you can. Bad credit is not always automatic grounds for refusal for the majority of lenders, even on this scheme.

However, what’s considered acceptable varies from provider to provider, so you may end up having fewer mortgage options than you’d like.

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How to get a Right to Buy mortgage if you have poor credit

Your first step should be to speak to a bad credit mortgage broker who specialises in Right to Buy mortgages. Make an enquiry and we will match you with one for free.

Your mortgage broker will guide you through the following steps:

  • Checking your eligibility for the Right to Buy scheme: You can check if your eligible but a broker can provide you with a bespoke breakdown of exactly which lenders, rates and deals you qualify for.
  • Downloading your credit reports: You can access a free credit report trial and then your mortgage broker can help you optimise your reports and build credit quickly ahead of your application.
  • Finding the ideal lender and best rate for you: The brokers we work with have deep working relationships with Right to Buy mortgage providers and can help you secure the right deal through them.

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Do you need a deposit?

The vast majority of mortgages need a deposit of some kind, but Right to Buy mortgages tend to have lower requirements than standard residential mortgages. It is possible to buy a council house through the scheme with as little as 5% deposit, though having bad credit might mean the lender asks for more.

Can you use the right to buy discount as a deposit?

Yes. If you have no cash deposit, some mortgage lenders will allow you to use the Right to Buy discount as your deposit. This is also the case if you have some deposit to put down but need more due to having bad credit – the discount, in this scenario, could be added to your deposit funds to help you secure a better deal.

How much could you borrow?

Use our calculator to get a rough estimate about what you could potentially borrow:

Mortgage Affordability Calculator

Use this calculator to determine how much you could potentially borrow for a mortgage, based on the typical salary multiples used by most UK lenders.

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Your Results:

You could borrow up to 

Most lenders would consider letting you borrow

This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.

Some lenders would consider letting you borrow

This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.

A minority of lenders would consider letting you borrow

This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.

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The Right To Buy scheme doesn’t affect how much you can borrow, though your bad credit could do – indirectly.

That’s because providers may not offer their lowest rates, only higher ones, to protect themselves against the perceived increased risk of lending to you. You may, therefore, have to borrow less as you won’t be able to afford the repayments on a larger mortgage. This is where a broker can be so useful as they will always look to maximise what you can borrow, while minimising your repayments.

However, to get a rough estimate of how much you could borrow for your RTB mortgage, you can use the same calculation as standard applications. Lenders usually determine how much they will extend by looking at your income and, generally, apply an income multiple of about 4-4.5 times.

They may offer higher borrowing limits, allowing you to borrow up to 5 times or even 6 times your annual income for your mortgage. There will be other eligibility criteria that you need to meet too, such as income source, age and deposit/LTV ratio. They will also conduct an affordability assessment which looks at your expenditure. If your expenditure is very high, they may not even go to a 4-4.5 level.

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Which lenders will consider your application?

Newcastle Building Society, Stafford Railway Building Society and NatWest are just three examples of providers who have been known to consider mortgage applications in these circumstances. Each lender will have a different approach to extending a loan to an individual with past credit issues.

Speaking to a broker is the best way to cut through all the noise and apply to a provider who accepts your specific circumstances and offers you the best terms.

Which credit issues will lenders accept?

It varies from provider to provider. However, even though you are using the Right to Buy Scheme, a lender’s specific rules won’t be any different than for a standard mortgage application.

What they will allow depends entirely on:

  • How they view the severity of the credit issue
  • How long ago it was

Whether you’re using the scheme or not, lenders generally have a more flexible approach to applications where bad credit problems were years ago, as opposed to just a few months. Or, if your problem was more recent, providers can be more lenient if it was a ‘lesser’ issue – something like a one-off missed payment on a phone bill as opposed to a bankruptcy.

For late payments and arrears, even with an RTB application, providers will typically accept them if they were at least three years ago. However, with the right lender, you may be able to secure a loan if they were more recent.

With the following issues, most lenders will want them to have settled or occurred at least six years ago.

You may find providers that are more lenient, while others won’t accept them at all, but their decision won’t be affected by the fact you’re applying through a RTB as opposed to a standard mortgage. A broker could help you identify the ones with flexibility and disregard those that would refuse your application.

Which lenders have you already tried?

Select the tiles below to continue:

HSBC
Halifax
Nationwide
Santander
Precise
Barclays
Natwest
Principality
Kensington
Other

Will having a guarantor help?

Potentially, yes. Guarantor mortgages can be useful in cases of poor credit and Right to Buy, but you need to consider the risks to you and your guarantor before going ahead.

The scheme doesn’t protect them in any way so they will be liable for any payments you miss – just as they would without the scheme. As a result, guarantors can lose money as this type of mortgage is secured against either a property they own or a lump sum of their money held within a savings account.

Get matched with a bad credit mortgage specialist

The Right To Buy scheme can potentially help you purchase your long term home at a significant discount. However, you might  still need a mortgage. Yet, applying for one as part of the scheme can be more complicated. That can be made even more difficult if you have had issues with credit in the past. But it is achievable.

Achieving it is made far easier with a broker. Their expert knowledge can quickly pinpoint a lender who accepts your specific past credit issues while also extending you the amount you need, at a rate you can afford. Your application is more likely to be approved first time, too – further reducing the impact on your credit score.

Our free, no-obligation broker matching service will connect you with the best bad credit mortgage specialist for you.

Call us on 0808 189 2301 or enquire with us today so we can put you in touch.

Maximise your chance of approval with a specialist in Right to Buy mortgages

Get Started Phone Icon 0808 189 2301

FAQs

There is no one credit score that you definitely need for Right To Buy. How mortgage providers appraise your past credit history varies from lender to lender. What is acceptable to some, won’t be to others.

It’s why using a broker is so helpful for this scheme if you have had issues with bad credit previously. They’ll quickly be able to identify providers who will consider your application.

Yes you can. Being in debt is not the same thing as having bad credit, and well-managed debt with payments within your means won’t impact your eligibility for a Right to Buy mortgage.

Your debt payments will, however, be factored in when the mortgage lender is calculating the amount you can borrow.

Yes, but if your credit issues are recent ones that occurred since you took out your mortgage, there’s a possibility you might not get as favourable a deal, although the fact you will likely have built up some equity since then could help here.

Your best bet is to speak to a specialist bad credit mortgage broker, who will be based place to help you secure the best remortgage deal based on the circumstances surrounding your bad credit and the amount of equity you have.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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