Getting a Loan on Right to Buy property

So you already have a Right to buy property. You’re in your 5-year redemption discount period and need a Loan on Right to Buy property

In recent years, there has been a remarkable surge in Right to Buy applications, as council tenants scramble to secure their homes before discount reductions set in. If you’ve successfully purchased your council home, you may now be sitting on significant equity, offering potential avenues for additional financing, even during the five-year discount reclaim period. So how can you get a Loan on Right to Buy property?

The dilemma of borrowing

Typically, first charge mortgage lenders are hesitant to provide additional funding while you’re still within the discount reclaim period. If they allow it, funding is usually limited to home improvements. Plus, obtaining permission from the local authority may be a condition of approval.

Alternative solutions

Second charge secured Loan on Right to Buy property present a viable alternative during the Right to Buy discount period. Unlike first charge loans, second charge options are more flexible and may allow you to draw funds for a wider range of purposes, including home improvements, debt consolidation, or even buy-to-let investment. However, be prepared for higher interest rates associated with these loans.

If you are interested in a second charge Loan on Right to Buy property we work with partners to offer a wide choice of second charge products.

Below are some answers to some of the most common questions that arise to give you a greater insight, and please do get in touch via our Contact Form below to fully discuss your current circumstances, debt consolidation. Or raising money for other funds, is a very sensitive subject with lots of rules and regulations, that need to be considered.

Frequently asked questions on Right-to-Buy secured loans

Q) Can I take out a secured loan while under the Right to Buy discount reclaim period?
A) Yes, there are options available.

Q) What distinguishes a first charge mortgage from a second charge secured loan?
A) Both are secured against your property, but in a repossession scenario, the first charge mortgage lender gets priority. If equity is insufficient, any unpaid amount may result in bad debt.

Q) Will my second charge lender differ from my first charge lender?
A) Yes, and the rates will typically be higher. It’s advisable to first consult your existing lender to see if they can offer a further advance option instead.

Q) Can you take out a second charge secured loan to repay personal debt?
A) Yes, debt consolidation is possible, even within the Right to Buy discount reclaim period. For their protection the Second Charge Mortgage Lender might insist on paying your creditors directly at Completion to make sure the money is being used for your debts.

Q) Can you take out a second charge secured loan to purchase another property?
A) Yes, buy-to-let properties. You cannot use the money for another home.

Q) Can I take out a second charge secured loan for improving my home?
A) Yes I’m lenders will consider this certain lenders do not like structural changes for example reconfiguring the layout of the property such as an extension so this will need to be talked through. Also lenders like to have a breakdown of what you will be spending the money on, for example: £15,000 on a new kitchen £10,000 on the new bathroom. There are also mainstream remortgage lenders that can take a view on this purpose – so give us a call!

Q) Will there be a legal process to go through on a second charge?
A) In most instances there will not be a legal process to go through. However, if the lender believes you would benefit from independent legal advice this may be requested.

Q) What income multiple can I borrow to when taking out a second charge mortgage?
A) The lenders will use affordability tools to assess the amount you can borrow typically taking in income versus committed expenditure. As a guide You are looking at a maximum around six times annual joint income to cover the first charge mortgage balance I did to the second charge mortgage balance, for example If the first charge mortgage balance is £150,000 and the second charge mortgage balance is £50,000 six times your annual income would need to cover £200,000, there are lenders that may look at this in a more generous way but this should give you an idea.

Q) What is the minimum equity I need in the property to be able to take out a second charge secured loan?
A) If you are inside the right to buy discount reclaim period you are looking at a maximum of 85% of the property value. To calculate this you will need to add the first charge mortgage balance to the new second charge mortgage balance as a percentage against the property value, for example if your property is worth £200,000 and you have an existing first charge £150,000 (currently 75% loan-to-value) you could borrow a further £20,000 to take it up to 85% loan-to-value.

Q) Does living in a flat affect my ability to secure a loan?
A) Up to four floors ex-local authority flats are normally acceptable. Once you go over four storeys then this falls into the realms of “non-standard” property, and flats located in the London area tend to have better chance. Deck/balcony access may be okay but will come down to the Lender Valuer’s comments.

Q) I’m self-employed – can I still qualify?
A) Most lenders will want a one to two year accounts track record.

Q) I’m on state benefit income can this be used in the affordability assessment?
A) State benefits such as disability living allowance personal independence payment child tax credits Universal Credit and child benefit can be considered. Employment support allowance is not widely accepted. You also need to cover both the first charge and second charge mortgage commitments which normally means that state benefits alone will be insufficient to pass affordability and generally speaking at least one applicant we need to have an earned income through work.

Q) How many mortgage applicants can you have on a second charge secured loan?
A) You can have 1 to 4 applicants.

Q) Do the applicants on the second charge need to mirror those on the first charge mortgage and land registry title deed?
A) Yes.

Q) If I’ve had credit problems can I still get a second charge mortgage?
A) Yes depending on the extent of the problems including a raise on your first charge mortgage the rate will generally be higher and the lender might seek more equity in the property.

Q) How long does it take to arrange a second charge secured loan?
A) Once you have supplied your documents it typically takes 3 to 5 weeks for the funds to be released.

Q) What interest rates do second charges start from?
A) The best rates are normally just under in the six percent per annum bracket. If you were to go up to the maximum 85% loan-to-value they start in seven percent range (as at 14/10/25). Every case needs to be discussed individually and a full illustration will be provided ahead of commitment.

Q) Typically how much do you charge for arranging the second charge?
A) We work with a partners to offer the greatest lender choice and the fee is normally capped by them at 10% of the loan size.

Q) Typically how much do the Lenders charge to set up a secured loan?
A) Lenders fees range from £595 up to £1,495. There may be the facility to add this charge to the loan but if you chose to do so interest will be charged on the fee. There may also be a valuation fee on top.

Ready to unlock the potential of your home? Whether you have questions about securing a second charge loan on a property bought under the Right to Buy Scheme, we and our partners are here to help! Please complete our Contact Form to get started on your funds release journey today.

To find out more about the Rights to Buy scheme and the government process, please visit the official Rights to Buy website by clicking here