If you rent your current home from the Council, then you may have the “Right to Buy” it and get quite a hefty discount. The first people you need to speak with your local council to see if they would allow you to buy it.
What is the Right to Buy Scheme?
The Right to Buy scheme is a policy in the United Kingdom that allows tenants of councils and certain housing associations to buy their council home at a significant discount.
Margaret Thatcher implemented the strategy in the 1980s, and it is still a popular scheme today.
You might also be able to put your discount against a mortgage deposit, allowing you to purchase a home with fewer savings.
Once you have found out how much the property is currently worth and how much you can buy it for, you can discuss the mortgage options available to you.
How do I know if I’m eligible for a Right to Buy?
You qualify for Right to Buy if:
- You’ve been a council or housing association tenant for at least three years, although not always for a continuous three years.
- The property is your only or main home.
- You don’t live in sheltered housing for elderly or disabled people.
- You don’t have serious debt problems, like bankruptcy.
- You don’t have any outstanding possession orders against you.
- Your home isn’t due to be demolished.
Housing association tenants are eligible for a similar scheme called Right to Acquire, but it does have slightly different eligibility and rules.
What’s the Right to Buy discount?
The market value of your home will be determined, and the Right to Buy discount will be measured based on that value.
The Right to Buy discount is different depending on where you live in the country, how long you’ve been a council resident, and whether you own a house or a flat.
You may use the government’s Right to Buy discount calculator to figure out how much of a discount you may be eligible for.
If you know how much of a discount you’ll get, you should start thinking about what kind of mortgage you’ll qualify for.
How much is the Right to Buy discount?
It varies depending on whether you live in a house or a flat. It applies to the total time you’ve been a public-sector tenant, not just the time you’ve lived in your current home.
You’re eligible for a 35% discount after three years’ tenancy. After five years, the discount increases by 1% for each extra year, up to a maximum discount of 70%.
You’re 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, up to a maximum discount of 70%. Maximum discounts apply whether you’re buying a house or a flat – check the government’s Right to Buy site for the latest limits.
Using your Right to Buy discount as a mortgage deposit
One of the biggest benefits of Right to Buy is that you can use the Right to Buy discount instead of saving for a deposit.
Most lenders, but not all, would recognise a Right to Buy discount as a deposit. Some would insist on your own deposit being saved in addition to or because of the discount.
Even if you use your discount as a deposit, you’ll always need some cash to purchase a council house. You may be charged certain fees for surveys, solicitors fees and arrangement fees with the mortgage.
Please speak to one of our mortgage advisers to help you find a lender that accepts the discount deal and offers the other features that’ll meet your needs.
What are Right To Buy Mortgages?
Right to Buy mortgages operate in the same way as traditional residential mortgages. In reality, everyone buying a council home through the Right to Buy scheme has the same mortgage options as anyone else. The amount you can borrow is determined by the property’s market value, the size of your deposit, and other factors such as your income and credit history.
How do I apply for the Right to Buy Scheme?
You apply for Right to Buy by sending your landlord a completed application form, and they will reply with a bid. The following will be outlined:
- The price they believe you should pay for your property
- How the price was worked out
- Your Right to Buy discount and how it was calculated
- Description of the property, plus any land, that is included in the price
- Estimates of service charges (for a flat or maisonette) for the first five years
- Any existing problems with the property’s structure
You have 3 years from the time you receive an offer to confirm your intention to purchase. If you believe The council has overvalued your home, you have the right to request an independent valuation. This must be done within three months of the bid being made.
If the council or housing association denies the Right to Buy application, they must explain why.
Get in touch with of our mortgage saving experts today.
Right To Buy Mortgage Considerations
Affordability criteria for Right to Buy mortgages
If you need a mortgage to purchase your council house, you’ll have to meet the same mortgage affordability requirements as anyone else.
Your income and expenses will be measured, and you must pass a credit check conducted by the lender.
If you’re self-employed, you may need one years’ worth of self-employed income records to show your earnings.
You won’t get a mortgage if you don’t have any income from work or self-employment, no matter how high your Right to Buy discount is.
Some forms of benefits are considered when determining mortgage affordability, but housing benefits are not. That’s because housing benefit can’t be used to pay a mortgage, so it’ll stop once your mortgage completes, even though you haven’t moved to a new house.
Selling your Right to Buy property
If you sell within five years, you’ll have to pay back some or all of the discount.
Think about how long you want to stay in your council home before you commit to buying it. (as you will have to remain in it for five years to keep the full discount).
Alternatives to a Right to Buy mortgage
If you apply for Right to Buy but decide it isn’t right for you, other government programmes, such as Help to Buy or joint ownership, will help you buy a home with a smaller deposit.
Low-deposit mortgages are also eligible for those who choose to purchase a home without these programmes’ constraints.
- Can I buy any council house with a Right to Buy mortgage?
- Can I use Right to Buy if I’m a housing association tenant?
No, but Right to Acquire is a similar scheme available to residents in housing associations, and you can normally get Right to Buy mortgages as well.
Can I apply for a right to buy mortgage with a partner?
Having the option to buy your home through the right to buy scheme can be exciting, but it may not be feasible due to your unique circumstances, or you may actually choose to buy your home with your partner. A lender would usually want to see that the names on the right to purchase papers match those on the mortgage The people who are eligible to purchase the proerpty must be on the right to buy papers (rtb125) and anyone not on those papers cannot be on the mortgage). For others, it may be possible to arrange a loan on a joint mortgage sole proprietor basis, which functions similarly to a guarantor.
Gives us a call today to see what may be possible for you.
Can I get a right to buy mortgage if I am retired?
The right to buy scheme may not become available to you until later in life, or it may not have been the right time for you until then. Some retirees may obtain a right to buy mortgage, but the word “retired” is very vague and may not accurately describe an applicant’s full circumstances.
A retired person expects that they are of a more mature generation, and this may be a consideration that prevents certain lenders from assisting. However, age is not a barrier to all lenders. Much will come down to affordability as with an applicant of any age, meaning that for those that qualify, a right to buy mortgage even if you are retired is very much a possibility.
Can I get a right to buy mortgage if I am self-employed?
When it comes to mortgages, being self-employed raises a lot of questions for those who are self-employed. If you are in a position to be offered the opportunity to buy your home through the right to buy scheme, you would be forgiven if you felt it was impossible. The perceived challenges that self-employed people face when applying for a mortgage are generally unfounded, and most applicants will be treated the same as anyone else. However, lenders must be satisfied that you can afford the amount you want, so affordability is crucial. Knowing how each lender evaluates a self-employed applicant’s income is crucial, and will ideally put you in a better position to be accepted. If you are self-employed, contact one of our expert mortgage advisers. Today, who will guide you through the process and help you secure a right to buy mortgage.
Right To Buy Mortgage Brokers
It’s always a good idea to seek expert advice before investing in any financial product. We will educate you on the various Right to Buy mortgage options available to you at Mortgage Saving Experts, and our team will gladly walk you through the entire application process. We have unique mortgage offers to meet all requirements, and we work closely with leading brands and smaller specialist lenders. Please get in contact with us right away to see how we can assist you.
Right To Buy Q&As
Can I buy any council house with a Right to Buy mortgage?
Can I use Right to Buy if I’m a housing association tenant?
How much discount will I get on a right to buy?
Do I qualify for a right to buy?
Can I make a joint application?
- someone who is on the tenancy agreement with you;
- your spouse or civil partner (As long as they are on the tenancy agreement);
- Up to three family members who have been living in your home for 12 months immediately before you make the application. All parties to the mortgage have to be on the tenancy agreement.
Is there right to buy in Scotland, Wales and N.Ireland?
I have lived in armed forces accommodation; can I use this time for the Right to Buy?
Will the right to buy discount count as a deposit?
What are the discount levels on a Right to Buy Scheme?
- 3 years – 35% discount for a house and 50% discount for a flat
- 4 years – 35% discount for a house and 50% discount for a flat
- 5 years – 35% discount for a house and 50% discount for a flat
- 6 years plus – add 1% per year for houses (up to 70% or the cash maximum – whichever is lower), add 2% per year for flats (up to 70% or the cash maximum – whichever is lower)