Last Updated on 10th July 2020
If you rent your home from a housing association, you may be eligible to buy it under the Right to Acquire scheme. This can be a great way of buying your first home and making the transition from a tenant to a homeowner.
Using the scheme will require a Right to Acquire mortgage. Right to Acquire mortgages are typically different from regular mortgages. As a result, it’s important to understand the application process so you’re able to increase your chances of approval. Applying for a regular mortgage when you plan on using the Right to Acquire scheme will often lead to problems and possibly being declined.
In addition to the scheme, there are a number of other government schemes and mortgage products to help first-time buyers. If you’re unsure of what the right scheme or mortgage is for you, make an enquiry and an advisor will guide you further.
What is Right to Acquire?
Right to Acquire is a government scheme which allows eligible housing association tenants to buy the home they rent. The main incentive of using the scheme is that buyers often receive a discount on the market value of the property.
The amount of discount you’ll get depends on your location within the UK. Nonetheless, discounts are typically between £9,000 and £16,000 from the overall price of your home.
A Right to Acquire mortgage is a loan used to purchase a home using the scheme. If you don’t meet the criteria for the scheme, you’ll be unable to apply for a Right to Acquire mortgage. As a result, you’ll need to make sure you qualify for the scheme before applying for a mortgage.
How to qualify
To qualify for the scheme, you must be a housing association tenant. Furthermore, you need to have been a housing association tenant for at least three years. This means that you need a public sector landlord in order to qualify, such as:
- A housing association
- Local and national trusts
- Armed services
If you have a private landlord, you’ll be unable to use the Right to Acquire scheme. That being said, there are other schemes available such as Right to Buy which you may qualify for instead. Your public sector landlord must also be registered with the Regulator of Social Housing. If you’ve been made bankrupt or have been evicted from a property in the past, you will struggle to qualify for the scheme.
When you apply to use the scheme, you must fill out a Right to Acquire application form and send it to your housing association. Your housing association will then reply with an offer if they agree that you’re able to buy the property. It’s at this stage at which you’d start looking for a Right to Acquire mortgage.
Making sure your property is eligible
The home you wish to purchase must also be eligible for the scheme. To be eligible, your property must be owned by a housing association. This is irrespective of whether your housing association built or purchased the home. Your local council may have also transferred the property to your housing association which would also make your home eligible.
Furthermore, your home must be self-contained and your main or only home. If you’re living in a property that isn’t self-contained or is an additional home, it’s likely you won’t be approved for the scheme.
Finding a Right to Acquire mortgage lender
The majority of lenders do offer Right to Acquire mortgages, however the way your application is assessed will differ. Some lenders will charge you more than others, with fees and rates varying across the market. Furthermore, some lenders will be more suited to your circumstances, especially if you have certain issues such as bad credit or a low income for instance.
To get a Right to Acquire mortgage, you may or may not need a deposit. This largely depends on the value of your home, the discount you’re receiving and the lender you’ve applied with. Lenders that recognise the discount may allow you to use it in place of the deposit but not all lenders will allow for this. This is why selecting the right lender can save you thousands of pounds, before your mortgage has even started.
How is Right to Acquire different from the Right to Buy scheme?
It’s important to understand that Right to Acquire and Right to Buy are two separate schemes. If you’re eligible for one scheme, you won’t be eligible for the other. This is because Right to Buy is for council tenants, whereas Right to Acquire is for housing association tenants.
There are similarities within the schemes, such as buying the home you’re renting. Nonetheless, you’ll need to apply with the correct scheme before applying for a mortgage.
Independent Right to Acquire advisors
While homebuying schemes allow for some great benefits, they can also make the process a little more complicated. This is because there are often additional forms and eligibility checks to carry out before you’ve even applied for a mortgage. Once you’ve passed the initial Right to Acquire checks, you’ll need to apply for a mortgage which will lead to further applications and checks.
This is just one of the many reasons we’d recommend getting the insight and expertise of an expert before applying. As mentioned, some lenders will consider your discount to be all or part of your deposit whereas other lenders won’t. Even if you have a deposit, certain lenders may offer better deals. Either way, speaking to an advisor can save you money over the term of your mortgage.