Looking for the best right to buy mortgages? With the right to buy scheme being re-launched in the UK, the number of right to buy mortgages is increasing and with so much choice and largely varying rates and fees, it can be very difficult to know if you are getting the best right to buy mortgage deal.
A reputable right to buy mortgage broker such as Ascot Mortgages can help to save you thousands by comprehensively searching through the mortgage market matching your requirements, to find the best combination of low fees and a low interest rates to ensure you get the overall cheapest right to buy mortgage available.
Right to Buy – The basics
The right-to-buy scheme was first introduced in 1980. It meant that secure tenants could buy their homes with a discount off the full market value. The discount is based on the number of years the tenant has lived in the property as a public sector tenant. Over 1.5 million people have purchased their homes under the ‘right to buy’ scheme in the UK.
There are lots of right-to-buy mortgage lenders and deals in the market – not all of these represent good value so it is essential that as soon as you decide you would like to use the right to buy to purchase your rental property you contact a reputable mortgage broker such as Ascot Mortgages as soon as possible.
The Right to Buy discount cap has recently been raised to £100,000 which will help tenants living in more expensive parts of the UK to buy their property using the Right to Buy scheme. People living in London, may be able to reconsider buying their London house or flat using the Right to Buy scheme.
Step 1 (Eligibility)
– Do you have the right to buy your rental property?
Right to buy schemes operate purely for tenants who have been tenants in the council property for at least 2 years. It is targeted at long standing public tenants, with the right to buy discount increasing in proportion to the years that rent has been paid. Once you meet the minimum length of time, which is currently set at 2 years in a council property for tenancies that began before 18 January 2005, you are able to purchase the property at a price that is lower than market value. If the tenancy began on or after 18 January 2005 (or after 12 October 2004 in Northern Ireland) then the minimum length of time is 5 years. A right to buy mortgage scheme is ideal for people who have lived in their council house for some time, work full time and plan to stay living in the property for the foreseeable future.
Generally you will have the right to buy your house if…
District / Local Authority Council Owned House
London Borough Council House
Non-charitable Housing Association
Registered Social Landlord
Housing Action Trust
If you can purchase your home using the Right to Buy Council Scheme you will be entitled to what is known as “Right to Buy Discount”. You will need to contact the organisation you are currently renting the property from to get the exact details of the right to buy discount you may be entitled to.
Step 2 (Confirming Scheme Availability)
– Availability and discount rates
If you believe you are eligible for the right to buy scheme it is good practice to contact your housing organisation to request details of the right to buy scheme, and what the current discount is. Typically the maximum discount ranges from £16,000 to £38,000 for both flats and houses, depending on your local authority. If you are happy with this you can proceed by requesting a property valuation. The discounts available vary if you are buying your housing association property, which is a slightly different scheme and you will need a Right to Acquire Mortgage.
Step 3 (Applying for Right to Buy)
– Ascot Mortgages will do this paper work for you
The next step is to send in a formal letter and form RTB1 (notice to council that you are thinking about buying your current council house) stating that you are intending to apply for the right to buy.
Once your local authority receive this form they have a pre-determined time period to consider your application and if you are eligible to buy your current property they will write back and inform you that you do have the right to buy your home. (This form is called an RTB2)
Step 4 (Valuation)
– The housing organisation will need to value your property
It normally takes around 3 months to receive valuation of your property from the council / housing association. The housing organisation / council will instruct their own or an independent firm to value your property. If the property has not been valued within 12 weeks of issuing the RTB1, Ascot Mortgages will issue the council with an RTB6 which is a delay notice this will speed up the process of your council property been valued.
Step 5 (The Offer)
– Property valuation minus discount offered
Once the property has been valued the council will issue with a document which is called a Section-125 which is basically the open market valuation (OMV), it will then have the discount amount (this will vary from region to region) and finally what you can buy the council house for. You have 12 weeks to make a decision if you want to buy the council property or not, once these 12 weeks have expired the council could extend your time to decide but this will be up to your local authority. The maximum discount you can receive will probably be 32% if your property is a house or 44% if your property is a flat/maisonette.
Step 6 (Mortgage)
– Securing a right to buy mortgage deal
Most Right to Buy Mortgage lenders that lend on right to buy properties will lend up to 95% or 100% of the RTB Price. When calculating your loan to value they will use the Open Market Valuation (OMV ).
There are also some Right to Buy Mortgage Lenders that will allow you to borrow more than the Right to Buy Price. The right to buy mortgage lenders work on the OMV and they can lend up to 85% of the OMV.
There are hundreds of right to buy mortgage deals available, and it can be tough to find the best right to buy mortgage for you. A reputable mortgage broker such as Ascot Mortgages will do all this for you, to make sure you are getting the best right to buy mortgage deal contact Ascot Mortgages.
When finding a right to buy mortgage deal, we will need to look at: What percentage of your property value the lender will lend; Will they lend you 100 per cent of the discounted right to buy purchase price or do you still have to put a deposit down? Whether you prefer a fixed or discounted rate deal? Are there ‘early repayment charges’ for coming out of the deal early? Whether there are any fees and charges (as these can add a significant amount to the overall cost of a mortgage deal so it’s important to factor in the fees. Ascot Mortgages will look for the best right to buy mortgage deal that suits your requirements and offers the best combination of low fees and a low interest rate.
As well as this there are a number of Council Right To Buy Mortgages especially designed for right to buy properties where there may be other issues. If you have bad credit or cannot prove all of your income there are still lenders available.
Note if you are not fully employed:-
Not all eligible right to buy property are lived in by full time employed people, if you are not full time employed but would still like to exercise your right to buy we can help you by looking at other specialist lenders.
Note if you have less than perfect credit history:-
As with most mortgages credit history is a consideration the mortgage lenders take in to account when determining your mortgage suitability. If your credit history is less than perfect, but you would still like to exercise your right to buy we can help you by looking at other specialist lenders for people with adverse credit history in the same way as any other customer.
‘The overall cost for comparison is 5.89% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.’
Right to buy mortgage terminology
The key figures when looking at right to but mortgage quotes are:
OMV – This is the “Open Market Value” of your property.
e.g. the selling price which would be realistically achieved if the property was put up for sale.
RTB Discount – The discount being applied to the OMV of the property.
RTB Price – The discounted price you will have to pay to buy the property.
Give Ascot Mortgages a call or email to see how we can help you.
Other types of mortgages which may be suitable:
Ascot Mortgages are highly experienced UK mortgage brokers, and we are able to source and secure the best mortgage deals for our clients. If a right to buy mortgage is not suitable for you, or would like to look at other mortgage products please ask us about 95% LTV mortgages, 90% mortgages and our specialist mortgages for first time buyers. Please contact us for a free consultation and free mortgage match, and Ascot Mortgages can search for the best mortgage deals for you to make sure you get the cheapest and most suitable mortgage.