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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 7th September 2020*

Am I eligible for a Right to Buy mortgage with bad credit?

Mortgage lenders can be very picky about who they loan money to, and adverse credit can ring warning bells. However, just because you’ve been declined a mortgage in the past, this doesn’t necessarily mean all hope is lost.

This article will be covering:

For general information about Right to Buy mortgages check out or dedicated right to buy hub page or visit our bad credit mortgages section.

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How does bad credit affect eligibility got a Right to Buy mortgage?

As with all instances of bad credit, it’s very much dependant on individual circumstances. The most important factors lenders consider is the type of credit issue, and the date the issue is registered.

Here, we’ll be delving deeper into the most common forms of adverse credit (ranging from least – highest risk) you may have been faced with as a borrower, and how each case can impact your eligibility to be accepted for a RTB mortgage:

Bad credit issueHow might this affect your application?
Right to Buy mortgages with low credit scoresMany high street lenders are likely to decline your application if you have a bad or low credit score. Some don’t “score”, they “check”; to make sure the rest of your credit profile meets their criteria even if your score is rock bottom.
Right to Buy mortgages with late paymentsMost lenders accept a couple of late payments if they occurred over three years ago. Some may accept if they occurred during the last 12 months, and a few will accept if you are currently behind on payments.
Right to Buy mortgages with defaultsMost high street lenders will decline if the instances have been made within six years, some will consider if outside of the last three years, several are happy if registered outside the last 12 months, and a few will consider if they have been registered within the same month. Specialist lenders are more accommodating around communications defaults.
Right to Buy mortgages with County Court Judgements (CCJs)Criteria is much the same as with defaults, although some lenders are less accepting of CCJs.
Right to Buy mortgages with arrearsMost lenders will consider you if the instance(s) occurred over three years ago, some are happy if over 1 year, a few may accept if it occurred within the last 12 months, and a small handful will consider you if you have current arrears.
Right to Buy mortgages with Debt Management Plans (DMPs)The main factors here are the registration and settlement dates. Most lenders will decline if you’ve had a DMP in the last 6 years. Some are happy if it has been settled for three years, a handful will consider you if you have a one currently as long as you have been maintaining the payments in the plan.
Right to Buy mortgages with Individual Voluntary Arrangements (IVAs)Again, the key factors are registration and settlement dates. Most lenders will decline if an IVA has been settled within the last six years, but some will consider if settled within five. A few will accept if settled over three years ago, and a handful will consider you if you are currently in an IVA.
Right to Buy mortgages and bankruptciesThe bankruptcy discharge date is the most significant concept at play. Most lenders will decline you if you’ve ever had one, some will accept you if you’ve been discharged after six years, others over three. A limited number will consider you if have been discharged over 12 months, and one or two may even accept after day one of discharge.
Right to Buy mortgages and repossessionsAgain, the date of the of repossession is the most important consideration. The majority of lenders will decline if you’ve ever had one, but some are happy to accept if the repossession instance occurred over six years ago. A few will consider if it was within three years, and a handful may accept it has occurred within the last three years.

The information in the above table was accurate at the time of writing but criteria has a tendency to change over time. For up-up-to-date information, make an enquiry to speak with an expert advisor over the phone today.

In a nutshell, the more severe and more recent the instance occurred, the more it is likely to affect your right to buy application being accepted, and the more likely you are to be offered a subprime mortgage rate.

The most important thing to keep in mind, though, is that bad credit doesn’t necessarily mean you can’t get a mortgage with favourable rates. Make an enquiry and the advisors you work with will connect you with a lender who specialises in borrowers with adverse credit.

How much deposit do I need for a Right to Buy mortgage if I have credit issues?

Depending on the credit issues you might not need any of your own “cash” deposit to put down as you are effectively getting equity against the open market value from the discount you receive as part of the right to buy scheme. If you have your own deposit to add to the discount then it will help reduce the amount you need to borrow and can improve the rate you are offered.

Can I get a Right to Buy mortgage with no deposit?

What if you want a right to buy mortgage but have no deposit available? As we’ve established, having a history of bad credit (depending on the number of instances, severity and recency) will put you into a higher risk bracket. The higher risk your circumstances, the more wary lenders are, and, usually, the more deposit is required so as to instil the lender with the confidence in your ability to keep up with the repayments.

It’s difficult to say exactly how much deposit you will need, as it is dependant on so many different circumstances and will vary lender to lender.

Deposit sources for Right to Buy mortgages

As well as how much deposit you will require for an RTB mortgage, where it is sourced is another important factor lenders will inquire about. Some sources are seen as higher risk than others, and can restrict your options when it comes to providers.

Here’s a breakdown of the most to least widely accepted forms of deposit:

Deposit sourceLikelihood of acceptance
Personal savingsGood
Sale of houseGood
Capital raised from another propertyGood
Inheritance moneyGood
Gifted deposit from close family membersFair
Sale of other assetsGood
Gifted deposits from more distant relativesLess likely
Overseas savingsFair (if provable)
Gambling winLess likely
Gifted deposits from friendsLess unlikely
Gifted deposits from an employerLess unlikely
Personal loansLess unlikely
CashLess unlikely

Affordability: How much can I borrow for a Right to Buy (RTB) based on my income?

How much you’re able to borrow for a Right to Buy mortgage will be based on your income, namely how much money you make, how you make it, and whether you have any other substantial debts against your name at the time of the application.

Low income and Right to Buy mortgages

If you (and your partner, if applicable) have low income, the majority of providers are only willing to loan you three to four times your annual income for a RTB mortgage – although there are a few lenders out there that will accept up to five or six times your income, depending on the circumstances.

You can find out more about how lenders calculate mortgage here.

If you’ve been declined on based on affordability click here.

Self-employment and RTBs

Lenders are gradually becoming more open to lending to the self employed, but even in “normal” circumstances you will usually be required to supply a minimum of one year’s worth of filed accounts (a handful of providers accept as little as nine months) in order to be considered by a limited range of mortgage providers.

Most lenders feel more comfortable if you have 3+ years of books to prove you have a reliable form of income, but if you have instances of bad credit against your name (again, depending on recency and severity), some might require more years’ worth of books, or may insist on a higher deposit to minimise the risk.

Read more about self-employed mortgages here.

Other factors affecting getting a Right to Buy (RTB) mortgage

We’ve covered the more common factors impacting a buyer’s eligibility for a Right to Buy mortgage if there are bad credit issues against their name.

Basically, the higher perceived risk a borrower poses (e.g. higher loan to value (LTV), recent / severe credit issues and poor affordability), the fewer lenders you’re likely to have access to, which potentially means higher rates and deposit requirements. And of course, having multiple instances are likely to restrict your options even more.

There are a few other less commonly known factors to consider which can further impact eligibility, including:

  • The property type: If the property you’re buying has any elements of non-standard construction (e.g. high rise flats, concrete panels, timber frame), a specialist lender might be required to make sure you get the best rates. You can read more about non-standard construction mortgages here.
  • Your age: If you’re looking for a Right to Buy mortgage in retirement, your choice of lenders could be fewer as most providers won’t offer a mortgage to anyone over 75. Others stretch to 85 and a minority will lend with no upper age limit, as long as they’re convinced you can meet the payments.

Speak to a Right to Buy mortgage expert today

If you’re seeking a bad credit Right to Buy mortgage, call Online Mortgage Advisor on 0808 189 2301 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee, and there’s no obligation or marks on your credit rating.


Updated: 7th September 2020
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.