Right-to-buy poor credit

Curious18

Evening all,

Hope you are all having a restful weekend. I have a few questions as I am determined to get a mortgage this year, but I don't want to act on it if it's not the right time. I want to buy my one bedroom flat which I rent from the council however I do have a considerable amount of debt (£4000) and on Experian my credit rating is 'fair'. I have lived in the property for 3 years and a half.

My questions are as follows:
1. Will I be able to purchase having bad credit and debt?
2. Will my interest rate be considerably more?
3. Does anyone have any named brokers which specialise in lending to high rise blocks (I live on the 19th floor and I have been told it will be difficult to find a lender.


Thank you in advance.

csgohan4

How much deposit, how much is your income, how much is the flat worth after discount e.t.c.


Need more information,


a Broker is your best port of call to individual advice tailored to you.


Do you plan on selling after a certain time to profit from the RTB?

davidmcn

I very much doubt that now is the right time for buying a 19th floor council flat, even if you had the cash sitting ready.

Cakeguts

You have a council flat and so there is a lot of research you need to do. Buying an ex council flat is usually and extremely bad idea because once you become a leaseholder and not a tenant you have to pay the service charge and for any repairs to the buildings. The repairs for the buildings can cost each flat £1000s but the tenants don't pay it. Only the leaseholders have to actually pay it.

You probably won't get a mortgage from anyone for a 19th floor flat.

There is a chance that this is also not a good thing for you personally to do if you have debt and bad credit because one you own this flat if you can't pay for anything like a mortgage you could easily become homeless.

Red-Squirrel_2

You would be much better off staying as a social tenant.

Getting on the 'ladder' isn't the be all and end all. You have a secure home, its worth a lot more to you as it is than it would ever be if you bought it, in fact it would be a liability.

Lioness_Twinkletoes

As Cakeguts mentioned, you'll have to pay services charges. For a flat in a tower they can be as much as £150 a month. If major works are required for example, roof repairs, window replacement, lift replacement (to name but a few) you'll be looking at bills that could be as high as £25k.

Personally, I wouldn't buy a flat in a tower block.

Curious18

Thank you all so much for your replies.


Yes it was for this reason I wanted to buy it. To profit from the RTB. I am on a 5 year contract and even though I have never had any issues. It is quite possible for them to bring in new social housing income thresholds. I am currently on 30k. Yes, I am aware of the ridiculous service charge and repair charges the leaseholders have to pay but I would be able to take that out of whatever I make from having tenants.

Red-Squirrel_2

Fantastic.

Cakeguts

If you have tenants in your RTB flat where are you going to live? Rent somewhere else?

Lioness_Twinkletoes

Curious18 wrote: »

Yes, I am aware of the ridiculous service charge and repair charges the leaseholders have to pay but I would be able to take that out of whatever I make from having tenants.

Don't be so naive. Of course you can't.

Assuming you get rent of £1k a month (ballpark, I have no idea where you live). You'll have to service a mortgage and service charges out of that. Don't forget it's taxable income. You might also have to pay managing agent fees. Maybe your tenant finds a raft of items that need repairs and every month is costing you another £500, then £100 and so on.

What if they stop paying rent and refuse to leave? What if your tenant trashes the flat before leaving? How will you manage a period of potentially 6 months with no rent and then get the property back to find it needs £5k worth of repairs?

Then, six months, maybe a year or two in and you've got a £25k bill looming. Where are you going to find the money to pay that? A LOT of LA's will not permit investor landlords (also known as non-resident landlords) time to pay. They get 14 days, as per the lease. Some, mine for example, MIGHT offer a 2 year interest bearing repayment period if the leaseholder can demonstrate severe financial hardship. So you are still looking at monthly payments of over £1k per month on top of your mortgage payments, service charges etc, etc.

Add to this the fact you are unlikely to be able to secure a mortgage and this hair brained scheme is looking less and less likely.

csgohan4

If your rent includes the service charge and maintenance, good luck finding a tenant who is willing to pay over market rates