Can I Get a Right to Buy Mortgage With Bad Credit?

If you want to own a home but lack the funds, bad credit mortgages might be your best bet. Nonetheless, this process can be complicated and it is always wise to seek professional advice before committing.

What Does it Take to Buy a Right to Buy Property with Bad Credit?

Since 1980, the government’s statutory Right to Buy scheme has enabled council tenants (now ex-council tenants) in England to purchase their home at a discounted rate. With over two million homes benefitting from this policy, homeownership can become more accessible while increasing wealth at the same time.

But it’s essential to note that not everyone qualifies for this type of mortgage, and lenders’ approval policies may differ significantly between providers. That is why consulting a broker is always recommended – they have firsthand knowledge of willing and participating lenders.

Bad credit can range from defaults and county court judgments to missed payments. When applying for a mortgage loan, lenders will assess your credit situation; the severity of any issues will determine if they accept you or not.

A default occurs when you fail to pay a bill and it remains on your credit file for six years. Lenders will review how many defaults you have, when they occurred and how much money was involved in each one.

Missed payments aren’t usually taken seriously by mortgage lenders, but you should still be prepared to explain any late payment history with your broker. They can help make sure the lender understands how serious your situation is and help make the application look the best it can.

You can also explain any negative events that were not your fault, such as being the victim of fraud or having your employer go bankrupt and leaving you without income. A mortgage broker will be able to speak with lenders on your behalf and ensure you’re approved for a loan that fits your situation.

If you have a co-signer, this could be an advantageous option to raise your credit score and improve the likelihood of getting a mortgage with bad credit. Their income and assets will be taken into consideration, possibly allowing for higher loan amounts with reduced monthly payments.

Before applying for a Right to Buy mortgage, make sure you have enough savings set aside to cover the purchase. Doing this can provide peace of mind in case something unexpectedly goes awry and you need to make an unexpected mortgage repayment or other unexpected expenses.

Government schemes such as the Help to Buy equity loan and Shared Ownership can assist with your mortgage payment, allowing you to borrow up to 20% of the purchase price of a new home – creating more affordable housing budgeting possibilities.