Getting a Right to Buy Mortgage with an Adverse Credit History
The Revolution team receives numerous enquiries from applicants who have been rejected for a mortgage due to adverse credit issues - and sometimes, from multiple lenders.
Here we'll look at how Right to Buy mortgage lending works if you have a bad credit history, and what to expect from your lender.
For more support with securing a Right to Buy mortgage with bad credit, give us a call on 0330 304 3040, or email at [email protected].
Does Bad Credit Mean I Cannot Get a Right to Buy Mortgage?
Not necessarily; it all depends on the circumstances, what sort of bad credit you've experienced, and how long ago it occurred.
Below are some of the most common adverse credit issues, and what they might mean for a Right to Buy application:
- Low Credit Score - high street lenders are likely to turn down applications for Right to Buy mortgages if you have a low credit score. More specialist lenders take a more flexible approach and will check your credit file for issues, rather than relying on the scoring system.
- Late Payments - if you have one or two late payments over three years ago, most lenders can consider your application.
- Defaults - where defaults have occurred in the last six years, many high street banks will reject a Right to Buy application. Others will lend to you if defaults happened over a year ago, and others will consider situations where defaults have been registered recently.
- CCJs - CCJs are usually considered more severe than defaults - although the right lender to apply to depends on how recently the adverse credit occurred.
- Arrears - you are more likely to be approved for Right to Buy if your arrears were over three years ago. Some lenders will support you with arrears within the last year.
- Debt Management Plans (DMPs) - lenders will look at when a DMP was registered, and when it was settled. If you have a DMP within the last six years, the majority of high street banks cannot lend. Niche lenders can consider Right to Buy applicants with a DMP registered even within the last few weeks, provided you can prove you are keeping up with the repayments.
- Individual Voluntary Arrangements (IVAs) - as with DMPs, the criteria for Right to Buy applicants with an IVA on their credit history depends on whether the IVS has been settled, when it occurred, and what value was involved.
- Bankruptcies - mainstream lenders rarely approve a mortgage for anybody with any bankruptcy history. Specialists would accept an application if the bankruptcy were discharged over three, or six years ago. A small number of bad credit lenders may decide to lend even if the bankruptcy was discharged very recently.
- Repossessions - when the repossession was registered will make a difference. High street banks are mostly unable to lend where there is repossession history. Other lenders will decide based on how long ago the incident occurred; usually within three years, over three years, or over six years ago.
If you have bad credit issues and are keen to secure competitive Right to Buy lending, you must consult an independent broker. The Revolution team can recommend the right lenders to apply to, and ensure you don't compound your credit history issues by making multiple rejected applications.
Give us a call on 0330 304 3040, or drop us a message to [email protected].
