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Right to Acquire Mortgage
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.
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.
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.