This post is an update to a post we made in 2019 here. I thought it was well worth revisiting following some exciting news from a couple of lenders in the last week or 2.
In that post, I wrote that we had been pushing some of the more specialist bad credit lenders to open up to doing Right to Buy Mortgages. Their response was that the people who fund them were not really open to lending on RTB properties at the time.
Currently if you have Bad Credit and are looking to purchase your home under the Right to Buy Scheme we have 2 lenders if you are not able to get a high street mortgage.
One of those lenders has rates of up to around 8% so not competitive in the slightest, the other can be quite complicated to work with which means your options are not great. Because of this, we believed there was space for a new lender to come in and pick up a relatively untapped part of the market with better rates and easier underwriting processes. We have pushed a couple of the lenders we work with to release a Right to Buy product over the last year or 2 and it finally looks like we have 2 lenders who are due to launch their Right to Buy mortgages within the next couple of months.
Right to Buy with Bad Credit options in 2020
As mentioned above, there are currently 2 specialist lenders who allow Bad Credit with right to buy, those lenders fall into opposite ends of the market, one will accept some minor adverse, the odd Default which needs to be over 12 months old, the other accepts a lot more adverse but their rates and fees generally start at around 6.5% up to around 8% so your choices are limited.
There will shortly be 2 new lenders who between them overlap with these 2 lenders in places but also fill the big void in the middle.
The first lender is only interested in the last 2-3 years, within that period they can accept Bankruptcy, IVAs, a DMP, multiple defaults and/or CCJs. Their rates typically start at 4.5% up to around 6.5% so they are looking to plug the gap at the more serious end of the adverse market but by doing that, they are also looking to reduce rates by some margin.
The second is a lender who covers the kind of lighter end to medium adverse. So they are more geared towards Defaults and CCJs over 6 months old. Their rates start at around 3.25% up to around 5%. They can also look to accept DMPs (over 12 months old) or Bankruptcy once discharged for 3 years.
The good news however is that it now means there are options for people with bad credit looking to purchase under the Right to Buy scheme from normal high street lenders, minor adverse at marginally higher rates than the high street, more recent or serious adverse and through to quite severe bad credit with rates ranging from normal through to 8%.
That should now mean those that fall into the middle ground in terms of bad credit should see a big improvement in their options and more importantly, what it will cost.
How can Mortgage Success help?
We have always been able to help with Right to Buy applications with credit issues but we now have more options with some exclusive deals and criteria not available through all brokers due to our relationship with the lenders in the Bad Credit market… which is why we know what is on the way before it gets launched.
Because we specialise in this part of the market it not only means we have exclusive or semi exclusive products, it also means we are experienced in working with these lenders and how they work better than more so than a general broker.
If you are looking to purchase under the right to buy scheme, please do get in touch. We can run through your circumstances and we discuss your potential options upfront.