I have been given a substantial discount by the Council to buy my property can I get a Right to Buy mortgage.
The simple answer the question above is ‘yes’ but there are some strict conditions which must be met in order to qualify for a Right to Buy mortgage.
In this article I am going to outline some of the criteria to help you understand what is needed to get a Right to Buy mortgage in 2014.
I have a bad credit profile can I get a Right to Buy mortgage?
By far the biggest batch of enquiries I receive is from people that have past bad credit and now want to take advantage of the Right to Buy discount being offered by taking out a mortgage for the balance. Unfortunately this is problematic as majority of the lenders that offer Right to Buy mortgages tend not accept adverse history. Now don’t get me wrong if it is a couple of late payments, or one satisfied default or CCJ under £500 we may be able to help (*).
Can I use the discount as my deposit point or do I need to put any money down myself?
The good news is we can use the discount given by the Council as your deposit so we will not require any additional money in most cases. This means if your property is valued at £250,000 and you get a discount from the council of £100,000, £100,000 is effectively the deposit. So the mortgage will be £150,000 and you will then need to demonstrate sufficient affordability to service this amount.
Myself and my mother are on the Right to Buy documents can we get a joint mortgage?
A lot of the applicants who receive Right to Buy mortgage discounts may not actually be eligible to get the Right to Buy mortgage because of their age. The good news is some lenders will work off the youngest applicant’s age when determining the mortgage term, thus spreading the payments over a potentially longer term to make the monthly repayments more affordable. In order for this approach to happen the younger applicant must have sufficient earnings to service the loan in its entirety in their own right without the dependence of the income from the elder applicant.
What is the maximum I can borrow for Right to Buy mortgage?
Affordability is determined by your own personal circumstances. As a guideline you could borrow up to five times your earned income. I would also add most lenders do not take benefit income into their assessment. Furthermore having ongoing cost will affect your affordability such as children, existing loans, and other regular expenditures. The best way to find out what you can borrow is to complete in enquiry form on the right-hand side of this page will we can assist your current circumstances.
For more information on Right to Buy mortgages please contact us on (020) 7993 2044 or alternatively complete the online enquiry form on the right-hand side of this page.
(*) There is one product exception to this however you will need to think carefully as the rate is very high at about 18% to 20% and should only ever be considered if the extremity of the council discount justifies the move. The property must be a house and in a desirable area. Minimum loan £50,000. There is minimum deposit requirement of 25% (on top of discount) which must be funded from your own private resources.
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.