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What is right to acquire?
Right-to-acquire is a government scheme that allows the housing association tenants to buy the house they are living in on a discount for a minimum period of 3 years. One condition for this scheme is you need to have rented it only through a landlord from the public sector.
How does the right to acquire work?
According to the scheme, a renter living in a house rented by a public sector landlord should have the right to own the same property. If he has spent three or more than three years in the place and it is his primary residence, then he should get the right to purchase the property. This scheme is one among those run by the UK Government to help people buy homes on a lower price and get a shelter for the whole life.
What is the discount on the right to acquire scheme?
Usually, the offered right to acquire discount limit is a minimum of £9,000 to a maximum of £16,000. The exact discount that you get depends on the value of the property and also the location. A deduction is the discount that may happen if you have used the right to buy or right to acquire scheme in the past.
What is the difference between the right to acquire and right to buy?
It is a usual doubt of most of the borrowers that we come across while dealing with the mortgage queries. Here is the difference between the right-to-acquire and the right-to-buy scheme. Have a look and gain the necessary information on the points where both the schemes differ. For more clarity on your doubts, you can visit the government website and for the mortgage deals, contact us. We have a large panel of right to acquire mortgage lenders that offer customised deals.
| Difference between right-to-acquire and right-to-buy | |
|---|---|
| Right to acquire | Right to buy |
| Right to acquire scheme supports affordable home buying at a discount for the tenants of a housing association. The discount amount is smaller. | Right to buy is also destined to let the housing tenants buy the home but at a comparatively higher discount. |
| The housing association can sell an alternative property to the tenant and not the one in which the tenant is living. However, it cannot be a forced decision. | In the right to buy scheme, there is no option to offer an alternative. Only the house in which the tenant lives is purchased. |
| The discount does not vary and remain flat according to the length of the tenancy. | The discount limit can change according to the tenure of the mortgage attained. |
Eligiblity for the right to acquire
You need to fulfil several eligibility requirements to make the big purchase finally. Without that, it is not possible to apply for a mortgage under the scheme.
- The property needs to be under a public sector landlord for three or more years.
- The house should be built or have purchased after 31 March 1997 by a housing association.
- It should be backed-up with the funds of a social housing grant by either local council or housing corporation.
When you are not eligible for right-to-acquire
Certain conditions can stop you from buying a home through the right to acquire and also attain a mortgage.
- If the bankruptcy has been issued against you
- If your home was repossessed by the lender in the past
- If you are living as a council tenant (in that case right to buy is suitable)
If any of the three conditions exist, it is better to not to apply for the right to acquire or take advice. Shine Mortgages can help you know better how things work in such conditions.
Deposit for the right to acquire
The usual deposit amount for the scheme is 5% to 10%. There are varied factors that decide what exact percentage you get between five to ten. Some lenders have capped the deposit amount one can provide for a purchase.
- The lending policies of the mortgage provider
- Your personal and financial circumstances
- Income-outgoing ratio
- Employment stability
- Length of credit history
Some homebuyers look for a right-to-acquire mortgage with no deposit. Are you also looking for the same? Then it is beneficial to know that few lenders allow that as they take the discount offered in the scheme as the deposit.
3 questions you answer on affordability for the right to acquire mortgage
Financial capacity of the applicant needs to go through varied parameters to prove the strength of repayment against a mortgage amount.
Following are the factors that count on the affordability parameter –
- How much you earn?
- What is the source of your income?
- What is the income-outgoing ratio?
Affordability is not only about repayments. It is also about valuation, arrangement and legal fee. Arrange money for these while you do calculations on cost.
You can borrow 4 to 5 times of your salary as a mortgage, but for that, the debt/outgoing part should not be more than 30% or 40% of the income. In some cases, if the applicant has an excellent financial capacity, the lenders can offer six times amount of salary as a mortgage. At Shine Mortgages, we have arranged the deals for our clients with the highest percentage of the salary as the mortgage amount. For the applicants, the more practical option is to present the joint income with the partner to take the larger part of the income as a mortgage.
Right to acquire and employment status – The conditions
There is no restriction on the type of employment status in the right to acquire. However, some employment conditions are considered as high risk and some as low risk. Those with regular income and permanent job are low-risk profiles. On the other hand, those who earn the significant part of their income through benefits are in the high-risk zone.
The self-employed people are considered in the high-risk zone but not in every case. If you are self-employed with three or 3+ years of experience and organized accounts signed by an accountant, definitely your chances on the right to acquire mortgage are bright. After all, the prime thing in a property loan is the affordability of the applicant; if that is fine, everything is fine.
Bad credit and right to acquire mortgage
It is possible to get funds despite a bad credit score; however, the variety of individual circumstances work in a completely different manner. To be clear, the severity of poor credit situation acts decisively to give a final word. If the situation is there since long or the applicant has received bankruptcy notice, then certainly the chances are weak. We never make false commitments to our clients and reveal the reality of the circumstances then and there. If you have a low credit rating, better is to make some suggestions on it and figure out how things can work. Shine Mortgages can help here with the right type of solution through its vast options on mortgages for bad credit. We are there, round-the-clock.
Shine Mortgages aims to make your mortgage journey smoother with instant solutions and lucrative mortgage options we pick for you from the market. Our panel of lenders is designed to deliver the relatable deals with a vital feature of customisation. Contact us to get the desired mortgage deal and know about the technicalities of right-to-acquire. .