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Getting a Right to Buy Mortgage

Getting your mortgage for your right to buy council house is going to be one of the main hurdles that you have to overcome. A right to buy mortgage is a long-term loan which offers a more favourable rate than standard or personal loans because it is secured on your new house and over a longer period, maybe 25 years instead of say 5 or 10.

Right to Buy Mortgage Options

In theory every council tenant wishing to exercise their legal right to buy the home they are renting will have the same options available to them as everyone else. It is worth bearing in mind that some council tenants have lower credit scores than average and that will have an impact on the range of mortgages available. Right to Buy Mortgages are generally available for a period of up to 25 years as we mentioned. This means you, as the mortgage holder pays a monthly amount which pays off both the interest and a certain amount towards the capital of the loan. As your loan progresses more and more of your monthly repayment goes towards the capital and less on interest thereby increasing your equity in the property.

There are many mortgage companies offering mortgages for tenants looking to exercise their right to buy. If you cannot get a traditional mortgage though normal means there are specialist lenders available and 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 re-payment terms will not be as favourable as with these mainstream sources. Our advice is not to take the first offer that comes along but shop around.

Valuing your property for Right to Buy

Your property will be valued by your current landlord. In many cases this will be the local Authority or Housing Association under the right to buy scheme. This will give you a starting point for calculating the amount of mortgage you will need to buy your home. From this figure you should deduct the discount given to you by your landlord. The cash you have saved in preparation for the purchase will be put this towards this discounted price, giving you the amount that you will need to raise through any mortgage.

Rent to Buy Mortgage Option

If getting a right to buy mortgage is simply not an option for you there is a scheme known as the Rent to Buy Scheme which 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. Eventually, at some stage you will have the right to buy the remaing percentage of the property.

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