Right To Buy Mortgages

Right To Buy Mortgage

Obtaining a mortgage for your right to buy is going to be one of the main hurdles that you have to overcome. As with any traditional house purchase, the majority of the finance is likely to come from a mortgage. A right to buy mortgage is quite simply a type of long-term loan which offers a more favourable rate than standard or personal loans.

Value of the Financing Requirement for Right to Buy
Your property will be valued by your current landlord and this will give you the starting point for calculating the level of finance that you will require in order to secure the purchase. From the figure that the landlord places on the property, you are able to deduct the value of the relevant discount (which is discussed in more detail on the next page). If you have any cash saved in preparation for the purchase, you are then able to put this towards the discounted price, which will give you the final amount that you will need to raise through a mortgage.

Right to Buy Mortgage Options
Theoretically, any council tenant looking to exercise their right to buy will have the same options available to them as any other purchaser. However, it is worth bearing in mind that certain restrictions may exist in terms of credit scores that will have an impact on the range of mortgages available. Mortgages are generally available for a period of up to 25 years, whereby the mortgage holder pays a monthly amount that covers either the interest on the loan only, or a larger amount which pays off both the interest and a certain amount towards the capital of the loan.

There are mortgage providers that specialise purely in offering mortgages for tenants looking to exercise their right to buy. Whilst these may offer an opportunity to buy for those who do not have the option of going to a traditional building society or high street bank, it is likely that the payment terms will not be as favourable as with these mainstream sources.

Alternative Finance Ideas
If obtaining a long-term right to buy mortgage is simply not an option, there is a scheme known as the Rent to Mortgage Scheme. This allows tenants to buy a share of the property and to pay a mortgage on that share, whilst the landlord retains the remaining share, on which the tenant pays rent.

Summary
Amount that is required is the landlord's valuation minus deposit saved and discount;
mortgages are available on the amount of finance required;
if a mortgage is unavailable, it is possible to purchase a share of the property.