If you’re a council house tenant, you may be able to get a mortgage using the Right to Buy government scheme. If you’re a Housing Association tenant, you can make use of a similar scheme labelled ‘Right to Acquire.’
Keep reading to learn more and then get in touch with our team if you’re interested in applying for a Right to Buy mortgage through the scheme.
What is a Right to Buy mortgage and how do they work?
Thanks to the Government’s Right to Buy scheme, public sector tenants can purchase the council houses they are living in at a substantial discount. In some cases, they may be able to do so without a deposit as the discount can be put towards the purchase price of the property.
While we refer to ‘Right to Buy mortgages’ throughout this guide, these aren’t specific mortgage products. Council tenants wanting to use the Right to Buy scheme have access to the same residential mortgages as every other borrower, so there isn’t one type of mortgage that is specific to people looking to buy their council home or Housing Association property.
If you qualify for Right to Buy, you can buy your council house at a discounted purchase price. The maximum discount across most of England is £87,2000 (at the time of writing) but if you live in the London boroughs, the maximum discount is currently £116, 200. The discount increases annually in line with the Consumer Price Index (CPI).
As mentioned, Housing Association tenants can use the Right to Acquire scheme. This works in much the same way as Right to Buy although associations may sell the tenant an alternative home to the one they are living in and the discount will be less generous than the one offered under the Right to Buy scheme.
Can I get a Right to Buy mortgage?
If you’re tired of renting, a Right to Buy mortgage is certainly a good idea. But before you apply for a mortgage, you need to make sure you are eligible for both the scheme from your local authority and a loan from mortgage lenders.
Eligibility criteria
The biggest obstacle you will face when looking to get any mortgage is meeting both the lenders’ eligibility and affordability criteria. Below we delve into what makes you eligible for a right to buy mortgage.
Right to Buy eligibility
To qualify for the Right to Buy scheme, you will need to meet the local authority’s criteria. This is outlined below.
- You need to have had a public-sector landlord for at least 3 years.
- The property needs to be your main and only residence and it needs to be self-contained (i.e. a property that doesn’t contain facilities that are shared by people outside of your household).
- You need to be a secure resident (i.e. there is a legal contract between you and your landlord).
- You need to be living in England (there are separate schemes for council tenants in Wales and Northern Ireland but not in Scotland where the scheme has been abolished).
- You don’t live in sheltered housing for elderly or disabled people
- You don’t have serious debt problems
- You don’t have any outstanding possession orders against you
If you meet the eligibility criteria, you can apply for the scheme by filling out the Right to Buy application form and sending it to your landlord.
Mortgage eligibility
If the landlord agrees to sell their property to you, you can then apply for a mortgage. To be eligible for a right-to-buy mortgage, you will need to satisfy the lender that you meet their criteria, as is the case for all other mortgage applicants. These criteria will usually be based on your household income, employment status, credit history, age, and a few other factors.
In some cases, you may need a specialist lender if you don’t meet the criteria set by most mainstream mortgage lenders. This might be the case if you have a poor credit history, are self-employed, and are at or close to retirement age.
We have access to specialist lenders that consider right to buy mortgages if you do have a bad credit history, perhaps because you have missed payments on loans and bills in the past, or if there are any other factors that could affect your mortgage chances, such as being self-employed, get in touch with us and we will explore your mortgage options.
How to get a Right to Buy mortgage
To get a Right to Buy mortgage, you should:
- Fill out the RTB1 application form
- Prepare for your mortgage application – check out this guide on how to prepare for a mortgage application
- Speak to a mortgage broker for advice and support
How much discount will I get?
If you qualify for Right to Buy, you will get a discount on the full market value of your home.
Your discount will be based on:
- How long you have lived in the property
- The type of property you are buying – a house or a flat
If you have been a public sector tenant for between 3-5 years and you live in a council house, you will get a 35% discount. After 5 years, the discount goes up by 1% for every extra year you have had a public sector tenancy. The discount will go up to a maximum of 70% or £87,200 across England (£116,200 in London boroughs), whichever is lower.
If you have been a public sector tenant for between 3-5 years and you live in a council flat, you will get a 50% discount. After 5 years, the discount goes up by 2% for every extra year you have been a public sector tenant. The discount will go up to a maximum of 70% or £87,200 across England (£116,200 in London boroughs), whichever is lower.
If the landlord has spent money on your home, your discount will be less. If they have spent more money on the property than your home is now worth, you won’t get a discount.
Check out the tables below to find out what your discount might be based on a house/flat valued at £100,000.
House with a market value of £100,000
| Tenancy | Percentage Discount | Discount Applied | Price You Pay |
|---|---|---|---|
| 3 - 5 years | 35% | £35,000 | £65,000 |
| 6 years | 36% | £36,000 | £64,000 |
| 7 years | 37% | £37,000 | £63,000 |
| 8 years | 38% | £38,000 | £62,000 |
| 9 years | 39% | £39,000 | £61,000 |
| 10 years | 40% | £40,000 | £60,000 |
Flat with a market value of £100,000
| Tenancy | Percentage Discount | Discount Applied | Price You Pay |
|---|---|---|---|
| 3 - 5 years | 50% | £50,000 | £50,000 |
| 6 years | 52% | £52,000 | £48,000 |
| 7 years | 54% | £54,000 | £46,000 |
| 8 years | 56% | £56,000 | £44,000 |
| 9 years | 58% | £58,000 | £42,000 |
| 10 years | 60% | £60,000 | £40,000 |
How to calculate your Right to Buy discount
If you would like to know the discount you may be eligible for, use this calculator to give you a rough estimate. When using the calculator, will need to know the estimated value of your home. To get this information, compare similar properties to yours on property websites or speak to an estate agent.
Alternatively, speak to one of our mortgage team and we will calculate the discount for you.
Why you should use a Right to Buy mortgage broker
If you’re looking to buy your council house or Housing Association home, your life will be made much easier with the support of mortgage brokers who have an understanding of the Right to Buy scheme and the processes involved when applying for a mortgage.
The mortgage advisers at YesCanDo Money have years of experience helping customers get Right-to-Buy mortgages so if you’re a public sector tenant and looking to move into home ownership, we are here to provide you with all the support and mortgage advice you need.
How our Right to Buy experts can help
After getting in touch with our team of expert mortgage advisers, we will help you in the following ways.
Did you know that when getting a right to buy mortgage, you can borrow more to raise funds for home improvements? Not only that but you can also raise further funds to cover the associated legal fees such as solicitor costs. Being able to do this saves you from having to pay extra thousands of pounds upfront when you buy the council property you live in. We have lots of experience helping our customers get the best right to buy mortgage across the UK. – Grant Humphries (YesCanDo Mortgage Adviser)
We will work out the costs involved
We will look through your finances with you and will advise you on your affordability for a mortgage. We will factor in the various costs associated with home ownership, including building insurance and household bills, when working out the types of Right to Buy mortgages you can afford.
We will help you with the application
We will help you with your Right to Buy application and will send it to your landlord. If they are willing to sell the house to you, we will then assist you with your mortgage and complete the mortgage application for the mortgage lender.
We will Make sure your council/landlord responds in good time
Your landlord must say yes or no within 4 weeks of getting your application (or 8 weeks if you have had your tenancy for less than 3 years). We will chase them up for you to make sure you don’t have to wait too long for an answer. If they do miss the deadline, you could get a further discount on the property.
If necessary, we will appeal your offer
Your landlord will send you an offer that details the price they think you should pay for the property. You have 12 weeks after the offer to decide whether you want to buy. If the price offered appears to be too high, perhaps because it’s more than the market value of the property, you can request an independent valuation of your home and we can help you appeal the offer.
We will find the best mortgage for you
When you have accepted the landlord’s offer, you’re on your way to home ownership. Your appointed mortgage adviser will search the market for the best deals on right-to-buy mortgages with the lowest interest rates to make sure you get something that is affordable for you.
We will be with you throughout the mortgage process
We will be with you throughout your mortgage journey, from applying for the Right to Buy scheme to make sure everything goes smoothly during the final stages of purchasing your home.
Get In Touch
If you’re a Housing Association or council tenant and you’re thinking about buying a home, get in touch with our expert team and we will advise you further. We will help you with your Right to Buy application, compare Right to Buy mortgages to ensure you get the cheapest mortgage rates, and give you all the advice you need throughout the Right to Buy mortgage process.
Get in touch with us today using the contact form below and we will give you a call back to arrange your first appointment with us.
Frequently Asked Questions: Right to Buy
Can you get a council house if your name is already on a mortgage?
You can’t buy a council house via Right to Buy if your name is already on a mortgage as the scheme is only available to people whose council property is their main and only home.
Can you remortgage a Right to Buy property?
Mortgage lenders will usually let you remortgage a Right to Buy property in exactly the same way you would with any other residential property but you will need to speak to your local authority before beginning the remortgage process.
How easy is it to get a Right to Buy mortgage?
With the help of a specialist right to buy mortgage broker such as ourselves, it’s easy to get a Right to Buy mortgage, as we will support you throughout all of the processes involved.
Affording a property can be made easier thanks to the Right to Buy discount.
Can I get an interest-only mortgage through the Right to Buy scheme?
It may be possible to get an interest-only mortgage through the scheme but as you will need to repay the capital at the end of the mortgage term, mortgage providers need to know how you’re going to pay back the loan amount.
Interest-only deals also come with high-income requirements, so to be eligible, most mortgage lenders will expect you to earn at least £50,000 a year.
Can I get a Right to Buy mortgage with a low income?
It’s certainly possible as your mortgage will come with lower monthly repayments due to the discount. But if you do have a low income, it’s advisable to speak to one of our right to buy mortgage brokers as we will make sure you only consider mortgage deals that have the lowest possible interest rate for somebody with your set of financial circumstances.
Can I get a joint Right to Buy mortgage?
Many lenders will consider you for a joint Right to Buy mortgage but the person you are buying with either needs to have lived with you for the last 12 months or be a joint occupant in your council housing.
I’ve never owned a property before. Can I use the Right to Buy scheme?
The Right to Buy scheme is actually perfect for first-time buyers as the discounted price can make mortgages more accessible. As such, you will be able to use the scheme if you have never owned a property before provided you meet the eligibility criteria set by your local council and the right to buy mortgage lender.
When can I sell my Right to Buy property?
You can sell your Right to Buy property at any point but if you want to sell it within five years (the discount clawback period), you may have to repay some or all of the discount. If you want to sell the property within ten years, you must give the local authority first refusal on the house/flat before selling it on the open market.
Do I need a deposit for a Right to Buy mortgage?
Not necessarily. Most lenders will let you use your Right to Buy discount as a deposit so you might not need to raise additional funds for the down payment. This only applies to certain right to buy mortgage lenders, however, as not every mortgage provider will let you use your discount. Should you use our services, we will put you in touch with a mortgage lender that does.
How long does the Right to Buy process take?
The Right to Buy process takes approximately 9-12 months from the initial application stage to getting your mortgage and owning your property.
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