Right to Buy Mortgages- Professional Mortgage Advisors
‘Right to Buy’ is a government scheme introduced in the 1980s by Margaret Thatcher through the Housing Act 1980, set up to give housing association tenants the right to buyThe right of council tenants to purchase their council. the council home they are living in, at a significant discount.
The scheme has provided millions of housing association tenants the opportunity to own their own home, hold a tangible asset and helped local authorities improve their public finances.
This article will provide you with information about the scheme, see if you are eligible and how to get a mortgage.
What is right to buy government mortgage schemes and how much discount can you receive?
The council will send a valuer round to assess the property’s value and provide you with a price for the property and the discounted value. How much your property is discounted by depends on the type of property, the length of time you have occupied the property and whether or not you have used the Right to Buy scheme in the past. This scheme is only available in England.
Currently the maximum discount across England is capped at £84,200, except London where it is capped at £112,300.
Houses are entitled to 35% discount for public sector tenants who have lived at the property between 3 to 5 years. The discount increases by 1% for every additional year of being a public sector tenant up to a maximum of 70% or the thresholds (capped at £84,200 for England, £112,300 for London), whichever is less.
Flats are entitled to 50% discount for public sector tenants who have lived at the property between 3 to 5 years. The discount increases by 1% for every additional year of being a public sector tenant up to a maximum of 70% or the thresholds off the purchase price(capped at £84,200 for England, £112,300 for London), whichever is less.
Deductions to the discount will be made if the landlord has spent money on maintaining or building the public housing you live in.
Bear in mind that if you sell your council house within 5 years of owning it, you may have to pay back all or some of the discount. An independent mortgage broker could help you to choose from various mortgage deals before starting your mortgaage application form.
What is a right to buy mortgage?
You may need a mortgage to fund the purchase of your council home and this is a similar process to a traditional mortgage and subject to checks as with any other mortgage applicant. Not all mortgage lenders offer Right to Buy Mortgages and each lender has different lending criteria’s and requirements but, in some instances, you may be able use the discounted value as a deposit and take out a mortgage on the remainder. Some lender may require for you to save up your own deposit in addition to or instead of the discount.
There might be other factors regarding the property in which lenders would need to consider before making a decision on whether to lend, such as the construction type or number of floors in the building.
For right to buy mortgages, most lenders typically require you to have a good credit history or credit score, income and affordability checks. If you do have factors which you think might affect your ability to get a mortgage such as adverse credit, self-employment, loans and others, a mortgage broker can access an extensive list of lenders and may be able to find you a match.
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 consider. It is better to consult a mortgage adviser who can help you with suitable discount deal. Every Right to buy mortgage brokers will require documentation confirming your eligibility for discounted purchase price.
Who can apply to buy a council home
If you are a council tenant and:
It is your only/main home
You are a secure tenant (allowed to live at the property for the rest of your life if you keep within the conditions of the tenancy)
The property is self-contained
Had a public sector landlord for 3 years at any point
No legal issues with debt Ex-council homes which have been sold to a landlord (such as housing association) whilst you were living in it, can still qualify for ‘Preserved Right to Buy’.
If you weren’t living in the property during the time when the council sold the property, you may still be able to purchase through the ‘Voluntary Right to Buy pilot’ scheme.
Joint applications are available with someone you’ve shared tenancy with or up to three family members who aren’t named on the tenancy but have lived with you for the past 12 months. You can contact a qualified mortgage advisor for mortgage advice as joint applicants.
An RTB1 application form needs to be filled and sent to your landlord who should provide you with a response within 4 weeks of receiving your application (or if they have been your landlord for less than 3 years then within 8 weeks).
It is also worth noting that if you sell your home within 10 years, you may need to offer it to any social landlord or old landlord at the market price before starting the process in the open market.
Next steps- Right to buy mortgage broker advice
The Right to Buy scheme has allowed tenants to become homeowners. If you have read this article and think you qualify for Right to Buy, you may need a mortgage which is a financial commitment that requires careful consideration and you may have further responsibilities that you didn’t have as a tenant. Contact ustoday if you wish to discuss further whether you can qualify to buy your council home and how to get a mortgage.
Can I buy any council house with a Right to Buy mortgage?
No. The rules say only certain properties can be bought using this government mortgage scheme. These include:
Council houses built after 1 January 1991
Houses sold by councils between April 1993 and March 1997
Homes purchased under the Housing Act 1988
You may be eligible for one of these schemes if you live in an area where they apply. Speak to a local authority housing officer or a professional mortgage advisor to see what options might suit you best.
Can you borrow more on a right to buy mortgage?
Yes. You can take out a higher amount loan from a lender. However, there could be some restrictions depending on your circumstances. For example, you cannot use the money to pay off another debt. Also, you must not already own a house.
What Government Schemes are available for first-time buyers?
There are range of Government Backed Schemes available for first-time buyers. Some are mentioned below:
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