Right to Buy Mortgage
Updated 29th September 2020
What is a Right to Buy mortgage?
The Right to Buy is a government scheme introduced in 1980 and gives the opportunity for council tenants to buy their council property. The council will offer a discount, this is based on the length of tenancy, this is currently capped at 10 years and a maximum of 40% discount for council houses
The discount can be used as the deposit and as such you don’t have to put any of your own funds in initially, however you will need funds for broker fees, valuation & solicitors fees.
To see about the Right to Buy eligibility click here
Am I eligible for a Right to Buy mortgage?
The scheme is available to all council tenants who meet the criteria for a Right to Buy mortgage. The key criteria I the property must be their only or main residence, below is an example of a few more
- Property must be self-contained
- Property must be in England
- They’ve had a public sector landlord for 3 years
If you are renting from a public sector housing association then the discount offered is much lower and is know as Right to Acquire.
What is the maximum discount?
At the time of writing the maximum discount is £82,800 across England, except in London boroughs where its £110,500. It will increase each year with the consumer price index (CPI)
Can I sell my property?
If you sell your home within 10 years of buying it through Right to Buy, you must first offer it to either:
- Your old landlord
- Another social landlord in the area
The property should be sold at the full market price agreed between you and the landlord.
If you cannot agree, a district valuer will say how much your home is worth and set the price. You will not have to pay for their valuation.
You can sell your home to anyone if the landlord does not agree to buy it within 8 weeks.
You’ll have to pay back some or all of the discount you got if you sell your Right to Buy home within 5 years of buying it.
You’ll have to pay back all of the discount if you sell within the first year. After that, the total amount you pay back reduces to:
- 80% of the discount in the second year
- 60% of the discount in the third year
- 40% of the discount in the fourth year
- 20% of the discount in the fifth year
The amount you pay back depends on the value of your home when you sell it.
Right to buy mortgage with bad credit.
If you’ve had previous bad credit it likely you would need to use a specialist lender. However, specialist lenders aren’t just for bad credit. Specialist lenders also have criteria which the high street lenders won’t do. Interest rate for the specialist lenders tend to be higher and so are the fees involved.
Below is a list of the types of bad credit which can be accepted for a buy to let remortgage.
- Late Payments
- Debt Management Plans
- County Court Judgement
- IVA – Individual voluntary arrangement.
If you’ve had previous bad credit, then getting an updated copy of your credit report is vital.
Speak to a right to buy mortgage advisor
There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or can’t borrow what they need. Just because one lender has declined you, don’t give up!
Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. All the mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.
The expert brokers we work with have experience in dealing with all aspects of Right to Buy mortgages, and importantly using the whole of the market to access the best deals available.