Right to Buy Mortgage without being on the RTB papers
Getting a Right to Buy Mortgage without being on the Right to Buy papers is nearly impossible. If you are reading this article it’s likely you’ve tried a number of places including your own bank and been flatly refused. Hopefully your search is now over but you still have a few obstacles to overcome – read on to find out more….
Right to Buys of course are by nature designed to help the occupier(s) of a council dwelling to purchase the property off the local authority – a scheme bought in by the much maligned Dame Margaret Thatcher but has benefited millions. By and large the Lenders have been supportive and we have a number that will allow mortgages up to the full discounted purchase price and in some instances beyond for home improvements and legal fees. However, nearly of them stick rigidly to the premise: ‘all applicants must be on the Section 125 Right to Buy Papers in order to qualify for a mortgage’.
At Niche Advice we pride ourselves on discovering chinks in Lending Policies and delight in sharing good news on open mortgage doors which are normally shut.
Let’s start with the good news: Right to Buy lending to applicants not on the RTB papers is possible despite what you may have heard. This does however come with following main caveats:
Lending Criteria for this product:
1) All applicants must live in the property.
2) The property must be a house in England. Flats or maisonettes don’t qualify.
3) At least one applicant has to be on the Section 125 Right to Buy papers and been a tenant for at least 3 years (although not consecutively).
4) Any rent arrears that have occurred must have been settled within 4 weeks of the local authority requesting payment.
5) No Housing Benefit can have been received in the last 12 months.
6) Maximum age of the eldest applicant at term end is 75 years.
7) Maximum number of applicants is two.
8) All person(s) mentioned on the Section 125 Right to Buy papers must be applicants.
Advantage of being an applicant on a Right to Buy Mortgage even if you are not on the RTB Papers
The overwhelming benefit of including occupier of the house as an applicant, even if they are not on the Right to Buy Section 125 papers, is the use of their income towards mortgage affordability.
For example, daughter who is employed as a civil servant is on £32,000 lives at home with her dad who has the Right to Buy. The Dad is a self employed carpet fitter who is winding down as he heads towards early retirement so his books show £11,000. He has been offered the right to buy his council home for £115,000. On his own that would be over ten times income – and no lender is the land exceeds six times income on a mortgage. However, when factoring in his daughter’s income suddenly the mortgage is affordable and the deal can be done.
Niche Advice has offered suitable advice to a number of Right to Buy mortgage applicants who thought their dream of owning their own home was unrealistic. To find out if you could be another delighted customer please complete the online form on this website or call T: 020 7993 2044. Furthermore we are happy to speak primarily to a relative if it is easier for you.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.