Can I Get a Right to Buy Mortgage if I Have Bad Credit?

The Right to Buy scheme was introduced in 1980 to help council tenants purchase their rented properties, including people with bad credit. It offers eligible housing association and council tenants in England the chance to buy their home with a discount of up 70% or to £110,500, or £82,800 for those living outside London. It doesn't matter how much the property is worth or how long you've lived there for you to qualify. To be eligible for the Right to Buy scheme, you must meet the following criteria:

• The property you’re looking to purchase is your only residence
• The property doesn't share facilities with other properties, for instance, a flat sharing a communal bathroom with other households in your building
• You've had a public sector landlord for 3 years or over
• You're not in legal conflict with creditors

To access the Right to Buy mortgage scheme, you must complete an RTB1 form and send it to your landlord. They must respond in 4 weeks with an RTB2 form informing you of their decision. If they don't want to sell, they must explain why. If the landlord does agree to sell the property to you, they must send an offer to you in the form of a Section 125 notice within 8 weeks if it's a freehold property and 12 weeks if it's a leasehold property. The offer from your landlord must include the selling price and the discount, accompanied by a property description, details of any known problems with it and estimates of any charges. You must respond to your landlord within 12 weeks and either accept their offer or request an independent valuation if you disagree with their terms.

Once the council that owns the property confirms the terms of the Right to Buy, you can apply to a bank or building society for a mortgage. Most mainstream and high street lenders will accept the discount as a deposit, but you'll still be required to comply with the rest of their lending conditions regarding credit checks and income.

If you have bad credit, this is when you may have to consider approaching a specialist mortgage lender who offers bad credit mortgages. Our specialist mortgage advisers at John Charcol can help you identify the best lenders to approach in your circumstances and advise you on completing your mortgage application.

You can get a Right to Buy mortgage to buy your council house with bad credit but you may find your options limited. This is because – depending on how bad your credit is – you’d have to find adverse credit mortgage lender that also offers Right to Buy.

Bad credit refers to a low credit score resulting from previous credit issues such as missing or late credit cards and mortgage or utility bill payments. Once your public sector landlord has agreed to sell your council home to you, applying for a Right to Buy mortgage is much the same as applying for a standard mortgage to buy a property on the open market.

Lenders will look at your credit history when you apply for a Right to Buy mortgage. They'll consider things like late or missed payments, defaults and CCJs (county court judgements), etc. Lenders will also want to know what caused your credit issues, how long ago the issues occurred and how much money was involved.

While it will depend on the type and severity of your bad credit issues, you may not need to put down any of your own money as a deposit. With a Right to Buy mortgage, the discount you get as part of the scheme means you're effectively getting equity against the property's market value. If you can add a deposit to the discount, it will help with reducing the amount you need to borrow and help you get a better rate.

It's worth noting that some lenders will require you to put down some of your own money upfront — usually around 5% to 10% of the property's value — regardless of the discount.

How much you can borrow for a Right to Buy mortgage typically depends on your income and affordability. Your mortgage broker will be able to confirm your maximum borrowing after learning about your financial situation. Alternatively try our how much can I borrow calculator for an estimate.

Obtaining a Right to Buy mortgage is a little more complex than obtaining a standard one, especially if you have a bad credit history and may have to make more than one application.

You may find that your options are limited and it’s hard to find a competitive Right to Buy deal. This is where John Charcol can help. Our advisers can support you through the process and steer you in the right direction towards a suitable lender with criteria that aligns with your situation. We even have access to adverse credit lenders that don’t work directly with the public, meaning we can find the very best deal on the market for your circumstances – no matter how niche your requirements.

Securing a Right to Buy mortgage with bad credit can be extremely challenging, especially if you try going it alone. The best way of getting a Right to Buy mortgage with bad credit is by working with a specialist mortgage broker such as John Charcol.

We are a whole market broker that works with a wide range of Right to Buy mortgage lenders. Using our extensive knowledge and experience, we can help you find a Right to Buy mortgage at the best possible rate for your circumstances. Get in touch with us today on 0330 433 2927 to learn more about how we can help you.