If you are renting your property from housing association, you may have heard that you have the Right to purchase your home under the Right to Acquire Scheme. This government scheme is similar to the Right to Buy Scheme, only right to buy is for council tenants and Right to acquire is for housing association tenants. The discount you can receive is generally smaller than the Right to buy Scheme. How they work are similar, but we go more in depth of the details below.
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What is right to acquire?
The Right to acquire Scheme can allow housing association tenants to buy the home they are renting from housing association at a discounted price, providing they meet the requirements. This can be extremely beneficial, as it can allow people a chance to step onto the property ladder and own their own home at a discount. The discount can vary between £9000 to £16000 depending on where you live in the UK. Bear in mind, if you sell the property within 5 years of purchasing, you may be required to pay all or some of your discount back. If you decide to sell within 10 years of the purchase date, you will be required to offer to sell the property back to your landlord first.
Once you have completed a right to acquire application form, your landlord will reply with his decision whether he agrees to sell along with a purchase price, the discount that is available and what’s included.
Do I qualify for the right to acquire scheme?
To qualify for the Right to acquire Scheme, you must be living in a housing association property and have had a public sector landlord for at least 3 years.
You should also check the property you intend to purchase is eligible under this Scheme. The property must have been built or bought by housing association after 31st March 1997 or transferred over from a local council after this date. The property must be your only and main home and a self-contained property.
You are able to make a joint application with someone who shares your tenancy or up to 3 family members who have lived with you within the last 12 months.
You will not be able to qualify for this Scheme if you are in the process of being made bankrupt or have an outstanding court order to leave your home.
Right to acquire mortgages
Just like any other properties or house purchaser, it is your responsibility to finance your house purchase and apply for a mortgage loan. It is important that you understand the costs associated with being a homeowner and ensure that you can afford the monthly repayments otherwise your home could be repossessed, and this can leave a mark on your credit report making it more difficult to source loans in the future.
Many lenders on the market now offer mortgages suited to the Right to acquire Scheme. It is vital to state that you are using the Scheme when applying for a mortgage so that the appropriate mortgage products can be offered to you.
In some cases, lenders may not require a deposit from you if they are able to use the Right to acquire discount to cover the deposit, but this will vary lender to lender and how much discount you have been offered. Of course, having a deposit will strengthen your application and possibly unlock more deals available to you with better interest rates.
Most lenders typically require you to have a good credit history or credit score, a form of income and carry out affordability checks. If you do have factors which you think might affect your ability to get a mortgage such as adverse credit, are self-employed, outstanding debts and other factors, then a mortgage broker will be able to help assist by looking at their extensive list of lenders and products to find one most suitable for you. Of course lenders will assess application on a case by case basis but a professional advisor will be able to guide you on how to strengthen your application.
There are other additional costs associated with the process of buying a property such as legal fees and administration fees which you will need to cover yourself.
What other factors impact my Right to Acquire mortgage eligibility?
You need to know about some additional things before you apply for a Right to Acquire mortgage. One of the things is your current income level, including any benefits you receive such as Job Seekers Allowance, Income Support, Universal Credit, etc. Additionally, Your rent should cover at least 50% of your monthly household costs, including bills like gas/electricity, water, Council Tax, TV Licence Fee, internet connection fees, phone bill, insurance premiums etc. Also, it is worth noting that you are automatically exempt from the Right to acquire a mortgage scheme by lenders if you have faced bankruptcy in the past or your home is repossessed in the past. There are limited Right to acquire mortgage lenders available for your application, so its better to contact for a piece of mortgage advice from an experienced mortgage broker.
Deposit and Right to Acquire mortgages
In most cases, the bigger the mortgage deposit, the more the chances of approval. However, there are some rights to acquire mortgage lenders available that can provide you low mortgage deposit.
For such lenders, If you’re applying for a Right to Acquire mortgage scheme, then you need to pay at least 5% of the purchase price into a deposit account before you close. This money goes towards paying off any existing debts secured on the property. It does not count toward your total deposit amount when calculating how much equity you have available to borrow.
Adverse credit issues and Right to Acquire Mortgages
Some mortgage lenders can also provide you with the Right to Acquire Mortgage Scheme if you have a bad credit history. But the chances of you getting a mortgage with a poor credit score directly affect your chances of approval. Therefore, it is better to consult a mortgage expert before going to a lender directly.
Next steps – Right to buy Mortgage Lenders
Right to acquire scheme can be a great way to own the property you live in and at a discount. If you have checked that you and your property can qualify for the right to acquire scheme, you may require a mortgage loan to purchase the property and this will be your responsibility to arrange. If you are unsure or wish to seek professional advice on obtaining a mortgage, then contact us today and one of our mortgage brokers will be in touch to discuss your individual case.
FAQs – Right to buy mortgage scheme lenders
Which Lenders will consider me for a Right to Acquire mortgage?
Some limited lenders can help you to get the Right to acquire a mortgage. The best thing here is to do your research and consult a market broker to get the best out of your mortgage process.
What are the different types of properties included in the Right to acquire Scheme?
The properties with landlords such as Housing Associations Councils, armed services NHS trusts, and foundation trusts could be counted in for Right to acquire mortgage schemes.
Is the Right to acquire Scheme available for self-employed mortgages?
Yes, it could be available, but you need to consult a financial advisor.
Can I get a right to acquire mortgage with bad credit?
Yes, you can get a bad credit mortgage, but you may need to contact a specialist mortgage broker to streamline the complete process.
What is social housing grant?
Social housing grants are given by local councils to people who cannot afford their rent. They are usually used to cover the difference between what they would normally spend on rent and what they actually receive.
Where can I find the “Help to Buy Mortgage guide”?
You can learn more about the “Help to Buy Mortgage” in our previous blog on “Help to Buy Mortgages.”
Can I buy any council house with a Right to Acquire mortgage?
Maybe or maybe not, there are many other things that you need to consider. It is better to contact ANY online mortgage broker before starting your application process.
Which government mortgage scheme helps to buy a currently rented house at a substantial discount rate?
Eligible Housing Association Tenants Scheme can help you get onto the property ladder by giving you an opportunity to buy your currently rented house.