Right To Buy Mortgages

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A right-to-buy mortgage is for people who want to buy their council or housing association home that they have been renting.

What is 'Right To Buy'

Right to buy is a government backed scheme which allows tenants of council or housing association properties that have been renting for a minimum of three years the ability to purchase their home at a discount price. After 3 years as a council or housing association tenant you can apply for the right to buy via the government website, fill out some forms and this starts the process. The maximum discount you can get in England is £84,200 and £112,300 if you live in London. 

The longer you have been a tenant the more discount you will receive, however after 3 years of tenancy the minimum discount is 35% of the full market value of your home. An example would be as follows; Lets assume you've been a council tenant in Mansfield for 3 years and the current full market value of your home is £100,000. This means that if you're eligible for the right to buy discount when you apply to your local authority you would get a 35% reduction from £100,000 which means you could buy your £100,000 value home for £65,000. 

The amount of discount that you are eligible for increases by 1% per year after 5 years of tenancy up to a maximum of 70% (or the cap of £84,200 whichever is the lower). So if you had been a council tenant for say 10 years your total discount might look something like this - 35% for the first 3 years and then 1% per year for years 5 to 10, which would mean you had a total discount of 40% 

Things to remember!

• You must have been a tenant for at least 3 years.
• If you are eligible and get the right to buy you will need to arrange a mortgage that allows you to borrow the amount of money you need.
• Once you have bought your right to buy home you can't sell it within the first 5 years without having to pay back a proportion of the discount.

What is a 'Right To Buy' Mortgage?

There is no such things as a right to buy mortgage in it's own right, but there are mortgage lenders that allow you to purchase your council home taking into account the legalities around buying from your public sector landlord. As long as you meet all the relevant lending & affordability criteria you have access to broadly the same mortgage ranges as everyone else. However mortgage lenders may impose specific conditions in some circumstances. 

Can I use the right to buy discount as my deposit?

There are a number of mortgage lenders that will allow you to use the whole discount that you receive from the right to by scheme as the deposit, meaning that you can buy your council home without having to put your own deposit down. However some lenders do require you to have some form of deposit such as 5%  

Can I borrow additional money when I apply for my mortgage?

In some circumstances you are able to borrow more that the discount purchase price when you make your application. The only reason you are allowed to borrow more money is for home improvements and not all lenders allow this as part of their lending policy around right to buy. 

As an example of what may be possible lets assume you are buying your council home and you have a discount of 40% and the value of your home is £100,000.

Specific lenders would allow the following - you could use the 40% discount as the deposit and ordinarily borrow £60,000 to purchase your home, but you think that you'd like to renovate the kitchen and bathroom. You know that this will cost you £15,000 to do. as long as we have quotes showing this then some mortgage lenders will allow you to borrow £75,000 (£60,000 for the purchase and the additional £15000 for the renovation works) at the same time.

If you're thinking about applying for the right to buy the first place to start is by talking to us so we can make sure that you'll be able to get the mortgage that you'll need. Once we have confirmed you are eligible for a mortgage we can help you with the right to buy application and talk you through the full process along with helping to explain the legal side and making sure that your paperwork is filled in correctly to prevent time wasting and unnecessary delays to your home ownership.