Help to Buy

WHAT IS A RIGHT TO BUY MORTGAGE?

Introduced in the 1980’s by Margaret Thatcher, a right-to-buy Mortgage, is a scheme that IS aimed at council tenants that allows them to purchase their current home at a substantial discount to the property market value. In some instances, the discount can even be used deposit towards the mortgage, to reduce you deposit requirements. With over 25 years of experience working with clients applying for the right to buy their local authority property, we have extensive exposure to working with the scheme, the eligibility criteria, and other options available if you do not qualify for right to buy.

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HOW TO I QUALIFY FOR A RIGHT TO BUY MORTGAGE?

There are some strict eligibility criteria to meet to qualify.

You’ve been a council tenant for three years, ideally, but not always continuously.
The property is your only or main home.
You don’t have serious credit issues, such as bankruptcy.
There are no outstanding possession orders on your property.

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WHAT DISCOUNT IS AVAILABLE?

The market value of your property is determined by your local authority The level of discount is then dependent on how long you’ve been a tenant, the location of your property, and whether it is a flat or house, and what type. You can find information here on the Governments own Right to Buy Discount Calculator, on the potential level of discount – please note this calculator is only a guide, and isn’t final, and you should get an official valuation from your current landlord before making financial arrangements.

WHAT IF I DO NOT QUALIFY?

If you do not meet the criteria then there are a number of other options available. Here at Mortgage Lolly, we are familiar with them all, and have been helping our clients navigate the options and all of their specific requirements for over two decades.

If there’s an option out there suitable for you, we will find it, and help you to make a successful application.

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Right to Acquire

this is a scheme available to Housing Association Tenants – however as well as the usual criteria of it being your only or main home, there are more restrictive eligibility criteria; it is only available for new builds, or properties acquired after 1997 by the relevant housing association. Your association must also be registered with the regulator of social housing in order for you to participate.

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help to buy covers a number of government schemes designed for those who lack enough deposit to buy a home. The help to buy equity loan scheme for first time buyers allows you to borrow between 5 and 20% (up to 40% in London) of the value of a new home. You have to provide at least 5% deposit, and There is a maximum ceiling on property value, which varies by region, London is currently set at £660,000. You will eventually pay interest on the government loan, there is 5 years interest fee, at a monthly interest of 1.75%, but you won’t make monthly repayments, but instead pay if you sell your home, pay off your mortgage, or the loan term ends. Your loan interest will be affected by changes in the Consumer Price Index (CPI)

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Shared Ownership

these schemes allow you to buy a portion of your home, (between 25 and 75%) and rent the rest, which is retained by the local housing association as their property. These schemes offer lower cost options for ownership, but there are a number of issues to be aware of. You can increase the share, called ‘staircasing’ but this tends to be expensive. You will need to obtain a specialist mortgage to facilitate the purchase, as Loan to Value (LTV) criteria are different for properties where you will only own a portion. Your annual household income must be below £80,000 when you apply. Schemes are limited to first time buyers, existing shared owners, and those who may have owned property in the past. All shared ownership properties are leasehold, and therefore you will pay an annual management fee. You will need a new mortgage if you want to buy out the remaining share. As entering into a shared ownership scheme can limit your options for a number of years afterward, and there are many long-term factors to consider before committing it is important to get good independent advice before you consider this option.

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Help to Buy | Right To Buy