What is a Right to Buy mortgage?
Right to Buy Mortgages are similar to regular residential mortgages. Anyone purchasing their council house through the scheme can access a range of deals.
There are a range of things that play a part in how much you can borrow. Borrowing amounts are determined by property value, deposit size, income, and credit history.
The Right to Buy scheme allows tenants in England to purchase their rented public-sector homes at a discounted price. A similar scheme exists in Northern Ireland with slight variations.
Government policy changes in 2015 expanded Right to Buy to include housing association tenants in England.
The Government reduced the qualifying tenancy period to 3 years and increased maximum Right to Buy discount to £84,200. Although this is £112,300 if you’re in London. This amount is adjusted annually based on the Consumer Price Index (CPI).
The discount varies depending on the type of property, and how long you have been a public-sector tenant:
- Houses – public-sector tenants become eligible for a 35% discount after three years’ tenancy. After five years’ tenancy, the discount then increases by 1% for each extra year you’ve been a tenant.
- Flats – public-sector tenants become eligible for a 50% discount after three years’ tenancy. After five years’ tenancy, the discount increases by 2% for each extra year you have been a public-sector tenant.
You apply for one by sending a completed application form to your landlord. If they accept, you will receive an offer letter. This will outline the following:
- The price they believe you should pay for the property.
- How the property price was calculated.
- Your Right to Buy discount and how it was calculated.
- A description of the property, as well as any land that’s included in the purchase price.
- Estimates of service charges (for a flat or maisonette) for the first five years.
- Any existing problems with the property’s structure.
After receiving an offer, you have 12 weeks to confirm purchase and can request a valuation if needed within three months.
If they refuse your application for Right to Buy, they must provide a reason why.
Buying your home through the scheme can be exciting, but it’s not always possible when buying alone. Therefore, applying with a partner can be a much better option.
Typically, a lender will wish to see that the names as quoted on the right to buy paperwork mirror that of the mortgage.
Some lenders may look at arranging the mortgage in joint names even if the right to buy is in your name only, although for some, it may be possible to arrange a loan on a joint mortgage sole proprietor basis. This type of mortgage works very similar to a guarantor.
Having the option to purchase your home through the scheme may not become available to you until later on in life.
Obtaining a Right to Buy mortgage is possible for some retirees, although the definition of “retired” is quite broad and may not fully capture an applicant’s situation.
The assumption is often that a retired individual is of an older age, which may limit options with certain lenders. However, age is not a deterrent for all lenders, as eligibility ultimately depends on affordability, regardless of age. Therefore, for those who meet the criteria, securing a Right to Buy mortgage as a retiree is indeed feasible.
Being self-employed you may think it’s difficult to get a mortgage in general. However, you can still purchase a home through the Right to Buy scheme.
Self-employed individuals shouldn’t encounter extra challenges when applying for a mortgage. You will typically be assessed the same as any other applicant.
Lenders need to ensure self-employed individuals can afford loans, and understanding their income assessment process is crucial for approval.
If you are self-employed, get in touch today and we can get you started on your mortgage journey.
If you’re looking to buy your council house or housing association property, we can help you find a mortgage deal that suits you.
Even if you have a poor credit history, it doesn’t mean you won’t be eligible for a Right to Buy mortgage.
As with any financial product, it’s always worth seeking expert advice first. At IMC Mortgage Brokers, we can advise on the Right to Buy options that are available to you, and our team will happily guide you through the whole application process. We work closely with leading brands and smaller specialist lenders, meaning we have access to exclusive mortgage deals to suit all requirements. Get in touch today to find out how we can help.
