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Right to Buy mortgage with bad credit


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Right to Buy mortgage with bad credit

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Last reviewed on 3rd March 2022

A Right to Buy mortgage can be a great way of purchasing your first home. That being said, if you have bad credit it’s likely you’ll run into problems. This is why applying for a Right to Buy mortgage with bad credit requires careful planning beforehand.

The majority of high-street mortgage lenders require applicants to have a good credit score. If you rush into applying for a Right to Buy mortgage with bad credit, you risk being declined. If you are declined, your credit score could take a further knock and delay any future chances of a mortgage.

On a positive note, it’s possible to get a Right to Buy mortgage with bad credit. Having the correct approach and advice can greatly improve your mortgage chances.

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

If you qualify for a Right to Buy mortgage but are worried about your credit, the first thing you should do is download a copy of your credit report. This will give you an idea of the credit issues you’ve had over the past six years. Although it’s possible to get a Right to Buy mortgage with bad credit, you’ll need to approach a suitable lender.

It’s important to check the accuracy of your credit file before applying for a mortgage. If you do find anything that’s inaccurate, then do contact the credit agency. Inaccuracies on a credit file can be very problematic for a mortgage application. This is why it’s a good idea to make sure your credit report is as accurate as possible.

Should I repair my credit before applying for a mortgage?

If you don’t quite yet qualify for a Right to Buy mortgage because of having poor credit, we’ll advise you on what to do next. For instance, we’ll provide you with tips on repairing your credit for a mortgage in the future. This also may not take as long as you think and it’s better than being declined.

How does bad credit affect a Right to Buy mortgage application?

Bad credit can vary quite considerably as each credit file will be different. For this reason, the type of credit problems you’ve encountered will impact your mortgage in very different ways. Severe credit problems such as having been declared bankrupt or applying after an IVA will make approval difficult. In comparison, having missed a payment a while ago is likely to have less impact on your mortgage.

That doesn’t mean to say that severe credit issues will make a Right to Buy mortgage impossible. What this means is, your application will be based on the credit problems you’ve encountered. Furthermore, each lender has its own unique criteria for assessing applicants with bad credit.

Which credit issues do Right to Buy mortgage lenders accept?

Whether you have a CCJ or a history of defaults, our advisors will assess your credit history and search for lenders that you’re eligible for. For instance, you may only qualify with specialist lenders depending on your credit history. If that is the case, it’s likely the mortgage rates on offer will be higher than normal.

It’s also important to know that a credit check is only one part of your mortgage assessment. Lenders will also check your affordability level by assessing your income and expenditure. Having a large amount of outstanding debt and multiple credit applications can make mortgage approval very difficult.

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Can I apply for a Right to Buy mortgage with recent credit issues?

Having had recent credit problems will make a Right to Buy mortgage even more difficult. This is because your credit history will show the last six years of your financial conduct. Credit issues that happened over six years ago are likely to have little relevance in getting a mortgage now. This is especially true if you go to a well-suited lender. In comparison, having recently had a property repossessed will make it very difficult to get a mortgage.

If you’ve managed to get on top of your credit problems, it can show lenders that you’ve taken some financial control. An advisor can also highlight this if underwriters are unsure of whether to approve you.

How much deposit will I need for a Right to Buy mortgage if I have poor credit?

One of the main advantages of using the Right to Buy scheme is that you won’t always need a deposit. This is because some lenders will accept your Right to Buy discount as part or all of your mortgage deposit. That being said, if you have bad credit then it can become challenging to do this. Often enough, having bad credit may mean that you’re required to use a slightly higher deposit than an applicant with a good credit score.

It’s common for lenders to request higher deposits to minimise their risk in lending to applicants with credit issues. For this reason, your Right to Buy discount may not be enough. If a lender agrees for you to use your discount for a deposit, the rates on offer may be higher than usual. Until we’ve spoken to you, it’s difficult to calculate what you’ll be eligible for. You can make an enquiry with an expert to get started.


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About the author

Mortgage Advisor | More Articles

Martin is a senior mortgage advisor and has held a CeMAP qualification for over 15 years while also completing an MBA in Global Banking & Finance.