Residential Right to buy

Right to Buy Mortgages

The good thing about Right To Buy mortgages is the fact that the lender will allow the local authority discount to be your deposit. Therefore if the discount is £75,000 you will only have to take a mortgage for the balance between that and the market value.

For example:

Open market value of the property is £200,000. You have the opportunity to buy it for £125,000. You can borrow the entire £125,000 as a mortgage. Effectively a 100% mortgage.

It is also common for lenders to add an extra rule preventing borrowing exceeding  the open market value by a certain percentage with 75% being the norm but we do have lenders we can access that allow this figure to be as high as 95%.

For example:

Open market value of the property is £200,000. You have the opportunity to buy it for £170,000. This equates to 85% of the open market value. So the lenders that only lend 75% would be ruled out unless a 10% deposit is put down.

Can I raise money above the Right to Buy discounted purchase price i.e. over 100% mortgage?

Yes, this used to be common place. However since the credit crunch the number of lenders offering this option has greatly reduced but a good and knowledgeable Mortgage Broker such as Mortgage Chain can still provide options. Any additional funds must be raised for home improvements and the total loan cannot exceed 75% of the open market. Capital raising for any other purpose is not acceptable.

Borrowing additional money is normally subject to the local authority’s/housing association’s unconditional postponement of their charge. If they will not provide this the application may not proceed.

How much can I borrow on a Right to Buy mortgage?

This will totally depend on: your current circumstances; your occupation; your income; age; personal credit commitments and a number of the dependents you have. I will be more than happy to work everything out once you have made an enquiry.

Benefit income may also be used as a secondary source of income to support a main job in some instances. Guarantors (of good standing) such as children vouching for their parents who have a Right-to-Buy can be considered provided their income covers their own personal commitments as well.

My Mother and Father have been granted the Right to Buy Mortgage but I’m the earner can I satisfy the income requirement on their behalf?

If you live in the same property you will need to be named on the Right-to-Buy papers. If you own a different property and have a successful career the lender may consider you acting as a ‘guarantor’ for your parents. Your income would need to cover both mortgages though.

Cheapest mortgage rates for a Right to Buy mortgage

To obtain the best Right to Buy mortgage rates possible it is a good idea to speak to an independent Mortgage Broker who can access the whole of the market. Be careful some Brokers work off a restricted panel which may mean you miss out on the lowest Right to Buy mortgage deals available.

Paperwork

This can vary from customer to customer but as a generalisation you will need the following:

  • A Right to Buy notice.
  • All the names given on the Right to Buy notice must be on the mortgage.
  • Details of the home improvements planned (if applicable).
  • If you are employed: 3 months’ payslips and last P60.
  • If you are self employed: 2 years’ accounts or self assessment returns.
  • If you are retired: your private, company and state pension or annuity statements.
  • Last 3 months’ bank statements showing your current rent being paid and salary credit.

Chelmsford, Essex:

> 01245 333 222


Hadleigh, Essex:

> 01702 684 222


Liverpool Street, London:

>020 3475 1212