What is a Right to Buy Mortgage and How Does It Work?
If you’re a council or housing association tenant dreaming of owning your home, the Right to Buy scheme could be your golden ticket. It allows eligible tenants to buy their home at a discount, making homeownership much more affordable.
A Right to Buy mortgage is simply a mortgage designed for those using this scheme but don’t have the full purchase price saved up. If you’ve got bad credit, you might be worried that getting approved will be impossible – but don’t stress! At Mortgage Bridge, we specialise in helping people with less-than-perfect credit get the mortgage they need.
Am I Eligible for the Right to Buy Scheme?
Wondering if you can take advantage of Right to Buy? Here’s what you need:
- You must have been a tenant with a public sector landlord (council, housing association, NHS trust, etc.) for at least three years. These don’t need to be consecutive.
- You need to be a secure tenant, meaning you have a long-term tenancy.
- You must not be bankrupt, in an Individual Voluntary Arrangement (IVA), or under a Debt Relief Order.
- You can apply on your own or with others, including family members who’ve lived with you for at least 12 months.
If you tick these boxes, you can apply to buy your home through Right to Buy.
How Much Discount Can I Get with Right to Buy?
The size of your Right to Buy discount depends on the type of property you’re buying and how long you’ve been a tenant.
How Much Discount Can I Get on a House?
- 3 to 5 years as a tenant – 35% discount
- Each extra year after 5 years – An additional 1%
- Maximum discount – 70% off the market price (or the monetary cap, whichever is lower)
How Much Discount Can I Get on a Flat?
- 3 to 5 years as a tenant – 50% discount
- Each extra year after 5 years – An additional 2%
- Maximum discount – 70% off (or the monetary cap, whichever is lower)
Right now, the maximum discount you can get is £84,600 (or £112,800 in London). These amounts increase every April in line with inflation.
Want to see what you could get? Try the government’s Right to Buy discount calculator!
How Do I Apply for the Right to Buy Scheme?
Before sorting out your mortgage, you’ll need to go through the Right to Buy application process. Here’s how it works:
- Fill in a Right to Buy application form (RTB1 notice) – Send this to your landlord.
- Wait for your landlord’s decision – They must respond within four weeks (or eight weeks if you’ve been their tenant for less than three years). If they reject your application, they must tell you why.
- Receive your offer – If your application is approved, your landlord will send you an offer within eight weeks (for freehold properties) or 12 weeks (for leasehold properties). This will include the purchase price, discount, and service charge estimates (for flats).
- Decide if you want to go ahead – You’ve got 12 weeks to accept the offer. If you don’t respond, you’ll get a reminder and an extra 28 days to decide.
- Challenge the offer if needed – If you think the valuation is too high, you can request an independent assessment.
Once you’ve accepted the offer, it’s time to sort out your mortgage!
Can I Get a Right to Buy Mortgage with Bad Credit?
Worried that your credit history will hold you back? Don’t be! While bad credit can make getting a mortgage trickier, it’s definitely not impossible. There are specialist lenders out there who understand that life happens, and at Mortgage Bridge, we help people just like you find the right deal.
What Do Lenders Look at for a Right to Buy Mortgage with Bad Credit?
Lenders will consider:
- Your credit history – Some lenders are more forgiving, especially if your financial situation has improved recently.
- Affordability – They’ll check your income, expenses, and overall financial situation.
- Deposit – The Right to Buy discount can often be used as a deposit, meaning you might not need to save up a separate one!
- Property valuation – Lenders will ensure the property is worth what you’re paying for it.
How Can I Improve My Chances of Getting a Right to Buy Mortgage with Bad Credit?
If your credit isn’t great, here’s how you can boost your chances:
- Check your credit report – Make sure everything is accurate and take steps to improve your score where possible.
- Reduce outstanding debt – Paying off credit cards or loans can make you look more attractive to lenders.
- Prepare for additional costs – Your discount acts as a deposit, but you’ll still need to cover legal fees and mortgage setup costs.
- Work with a mortgage broker – We know which lenders are willing to work with bad credit applicants, saving you time and stress.
Can I Sell My Right to Buy Home After Purchasing It?
Yes, but there are some rules:
- Selling within 5 years – You may have to pay back some (or all) of your discount.
- Selling within 10 years – You must offer your old landlord or another social landlord in the area first refusal at the full market price. If they don’t want to buy it after eight weeks, you can sell on the open market.
- Disagree with the valuation? – You can request an independent district valuer to assess the market price.
After 10 years, you can sell without any restrictions!
How Can Mortgage Bridge Help with Right to Buy Mortgages?
Right to Buy is a brilliant way for tenants to become homeowners – even if you’ve got bad credit. But getting the right mortgage can feel overwhelming, and that’s where we come in. At Mortgage Bridge, we specialise in helping people with bad credit secure mortgages that work for them.
We know which lenders are flexible, how to present your application in the best possible light, and how to make the process as smooth as possible. If you’re ready to take the next step towards owning your home, get in touch with us today. We’d love to help!