Find the Best Right to Buy Mortgages in the UK
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What is a Right to Buy Mortgage?
A Right to Buy Mortgage refers to giving council and housing association tenants the opportunity to buy their house at a discount rate. Right to Buy is a hot topic in the news and many believe it has been beneficial for the UK economy allowing price houses to rise and council tenants to own a tangible asset.
The idea behind the discount is that every time an additional home is sold, a new affordable house will be built to manage the waiting list of affordable housing. If the tenants who accept this discount wish to sell their property within five years, part or all of the discount will be repaid to the Government.
How much is the Right to Buy Discount
The Right to Buy Discount depends on the how long you have been a tenant with the public sector, the type of property, the value of your property and your personal financial circumstances. However, the maximum right to buy discount you can receive is 60% of the properties market value which is equivalent to:
- £100,000 in London (£75,000 in the rest of England)
- £16,000 in Wales
- £24,000 in Northern Ireland
- Not applicable in Scotland (Read more) You are still required to get a Right to Buy Mortgage from a bank or building society and make monthly repayments – the only difference is that the value of the property is heavily discounted which makes your mortgage much cheaper than normal. Some mortgage lenders may be satisfied having equity in your home, so you won’t have to put down a deposit. This means that if you sell the property that the lender will have a huge share in the sale.
Am I eligible for a Right to Buy Mortgage?
To be eligible for a Right to Buy Mortgage, you must have lived as a council tenant for at least 3 years (was previously 5 years). Included in this criteria is living for 3 years as a housing association tenant, armed forces tenant, NHS tenant or with a public sector landlord. You may apply with three joint tenants or family members if you have lived in the property for 12 months because this would be 3 years combined.
You are not eligible for the Right to Buy Scheme if you are fall under the following:
- The property isn’t your only home
- You share a kitchen or bathroom with other tenants
- You are bankrupt
- You live in sheltered housing
- Your home has been adapted for people with special needs.
Right to Buy Mortgage Calculator
Quiddi Compare offers a free Right to Buy Mortgage Calculator which you can use to tell you how much you can borrow and whether you can afford to take the next step. We ask you to fill in a few basic details including the market value of your current property, how much deposit you have and your credit history. With this information, you can see if a Right to Buy Mortgage is for you and we will also recommend a number of mortgage quotes specifically for your requirements.
One of the benefits of apply for a Right to Buy Mortgage through an independent broker like Quiddi Compare is that you get to see a number of competitive deals in one place, rather than having to go to each mortgage provider’s website and compare deal by deal. Since we work with a variety of Right to Buy Mortgage lenders in the UK, we have access to a number of deals and discounts, particularly introductory periods where you pay less for the first few years. Best of all, our Mortgage Tool is completely free to use and we will not pass on your details to any third parties without your consent.
The costs involved with a Right to Buy Mortgage
Although you are receiving a potentially huge discount on your property, there are still costs involved like with any mortgage. For instance, you will have to pay stamp duty which can range from 2% to 12% depending on your property’s value. Also, there are standard legal fees and the cost of a surveyor which you have to budget for.
As part of the Right to Buy Scheme, you may be required to pay maintenance fees like ground rent and service charges or contribute to any repairs or improvements to the common areas.
Ultimately you have to try take this extra costs into consideration and whether you can afford to take on a Right to Buy Mortgage even with the discount in place. Failing to keep up with mortgage repayments and other ongoing costs can cause debt problems and for your property to be repossessed.
Selling your home after the Right to Buy Scheme
If you wish to sell your council home within 5 years of accepting the Right to Buy Scheme, you will have to repay part or the entire discount. The discount becomes less and less for the longer you remain in the property.
- 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 If you bought your home after the start of January 2005, the regulation states that your council has the right to refuse you selling your home for 10 years.
Right to Buy for your Council Home
For more information about Right to Buy for your council home, you can download a claim form here or you can use the council finder to contact your local council. If you apply for the Right to Buy Scheme, your council must get back to you with a decision within 4 to 8 weeks.
If your Right to Buy Mortgage is successful and you become a full-fledged homeowner, you will not be able to receive housing benefit.
The advertised rate is 1.95%. However this rate will not be available to everyone and will depend on your individual circumstances and the loan to value ratio of your mortgage. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. Some partners may charge you a fee for helping you find a Mortgage or Secured Loan or other services they provide. MAKE SURE you check with the company before agreeing to any service if they charge you a fee and what the terms are. Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk QuiddiCompare does not charge a fee and does not provide any financial advice relating to mortgages. However we may on occasion receive commissions from IFA’s and mortgage providers, brokers and intermediaries for introducing you to them. The content of this site is meant to be informational, and it should not be considered financial advice. – See more at: quiddicompare.co.uk/mortgages