Anyone in Hull who has been renting from a local council or housing association may find they are eligible to purchase the home they are renting, via the government Right to Buy Scheme.
Typically, you receive a discounted purchase price (often acceptable as a form of deposit) which allows this. To qualify for the Right to Buy Hull, you must have been a public sector tenant for at least three years, with the longer you have rented impacting the discount you receive.
Every applicant has different circumstances, and what could be a straightforward process for some can be a different story for others. You may find that although you are eligible, you have bad credit to your name. This can severely impact your ability to obtain a mortgage.
Luckily, for those who want to know if you can obtain a Right to Buy mortgage in Hull with bad credit, the answer is yes. Of course, personal circumstances and the discretion of mortgage lenders are always a factor, but with the help of a mortgage broker in Hull, you could still have options to obtain a right to buy mortgage.
How do I know if I have bad credit?
What is defined as bad credit depends on the mortgage lender you are dealing with. Some lenders may deem it to be things like missed credit card payments, phone contract payments or loan installments. On the other hand, there are some who may not classify them as such and look past them.
However, if you have gone through withdrawal, bankruptcy or CCJ tied to your name, you will be classified as having bad credit. In all these cases, bad credit will lead to a decrease in your credit score, with this impacting your chances of obtaining a Right to Buy Mortgage in Hull.
Having a low credit score can impact your situation negatively. Lower credit scores can make getting a mortgage challenging. Even though we have a large panel of lenders, many being specialist in bad credit mortgages, you will still be considered a higher risk.
To a mortgage lender, there is every chance you cannot repay your mortgage payments each month, leading to eventual repossession and a loss of profit to the mortgage lender. Because of this, applicants who are accepted tend to face much higher costs.
What types of bad credit will have an impact on my Right to Buy mortgage?
To simplify any bad credit can have a negative impact on any mortgage not just a Right to Buy mortgage. Bad credit affects everything from first time buyer mortgages to remortgages and everything in between.
As mentioned above, bankruptcy can be a big issue. Typically, if at least 3-6 years have passed since you were discharged from your directorship, you will have a better chance of finding a specialist mortgage lender willing to let you borrow.
Debt Management Plans and Individual Voluntary Arrangements (DMPs and IVAs) can also have an impact on this. This is a fairly stricter circumstance than some of the others. If there have been at least 3 years, you have a much higher chance of success, though if not, you are limited.
Being subject to repossessions can also make getting a Right to Buy mortgage difficult. There are some mortgage lenders who are willing to let you borrow under these circumstances if it has been a few years since, although we tend to find the vast majority will probably reject your application.
Of course, some of the more commonly encountered instances include things like CCJs (County Court Judgements), defaults, arrears, missed or late payments and just generally having a low credit score. As you can imagine, the latter is the least serious of the ones mentioned.
Overdue payments or missed payments can vary and a mortgage lender’s perception may also vary. Arrears, defaults and CCJs are much more serious, with mortgage lenders wanting to see that at least three years have passed.
In either of the latter cases, a specialist mortgage lender will also review the exact circumstances surrounding the bad credit, as there could be options depending on whether you have satisfied payments and are a few years removed from the situation.
How does having bad credit affect a Right to Buy mortgage?
With all bad credit mortgage circumstances, the better chance you will have will depend on the further you are from your bad credit problems. Trying to repair your financial situation also looks good in the eyes of a mortgage lender.
Things like cleared CCJs, a tidy credit file, could help improve your chances. Of course, this still does not guarantee anything and obtaining a Right to Buy mortgage with bad credit will still be challenging, but it means you could have options.
The best way to see if you have a chance at obtaining a Right to Buy mortgage with bad credit is to speak with a dedicated mortgage broker in Hull. Many mortgage brokers, like us here at Hullmoneyman, have access to specialist mortgage lenders on the panel that offer complex case deals.
Whilst the process may be a challenge and you could face higher interest rates, with a mortgage broker in Hull finding you the most suitable deal, based on your individual circumstances, is part of our job.
If I have bad credit, do I need to put down a deposit for my Right to Buy mortgage?
Those applying to buy their local authority home using a Right to Buy mortgage, the amount of discount that will be applied can often be accepted as a deposit on the property by the mortgage lender. This is because you already purchasing at below its market value.
Your circumstances may be different, however, if you are purchasing and taking out a Right to Buy mortgage with bad credit in Hull. The reason is that you are at a higher risk to the mortgage lender because of your bad credit.
If your discount is equivalent to a smaller deposit and you have bad credit, a mortgage lender may require you to deposit your own funds to increase that percentage. In other cases, if this discount is equivalent to a deposit of 10-20%, they may be more lenient.
Ultimately, it depends on how long you’ve lived there, your personal situation, such as your bad credit and the mortgage lender. With all mortgage instances, the higher deposit you can put down, the better the mortgage deals you can access.
This applies to a Right to Buy Mortgage Hull as well, as whether you have bad credit or not, putting down more deposit can open you up to much better mortgage deals, lowering either your monthly payments or interest rates.
Date Last Edited: 01/10/2024
