Best Mortgage Deals
Advice, help, information and guidance on the best mortgage deals available

Right To Buy Mortgages

best mortgage deals by AnnaThe original right to buy scheme was first introduced in 1980 giving most tenants living in local authority properties the right to buy them, and since then many lenders have entered the market in order to provide the best mortgage deals.

In simple terms the right to buy scheme offers you as a council tenant the option to buy your home at a rate discounted from that of market value. However in order to qualify you must have been living in the house for a minimum of two years. So let's have a look at the types of mortgages available, and some of terms you will come across when talking to the lenders in order to find the best mortgage deals.

Best Mortgage Deals - Right to Buy Scheme

Under the Government's right to buy scheme, you have the opportunity to buy your council house at a discount from the full market value. The level of discount is based on several factors including the length of time you have been a tenant, and also your local authority, as discounts vary from region to region.

The scheme is designed for tenants of local authorities and those assured tenants of registered social landlords who previously held secure tenancies with local authorities. If your secure tenancy was in existence before 18 January 2005, or you were a public sector tenant before 18 January 2005 (and you have been a public sector tenant continuously since that time), you do not have the right to buy until you have spent at least 2 years as a public sector tenant. If it is after this date then you will need to have spent at least 5 years as a tenant. If you are eligible you can buy your home by paying the full discounted purchase price at once with a maximum discount ranging from £16,000 to £38,000 for both flats and houses, depending on your local authority

Best Mortgage Deals - Right To Buy Mortgages

When we start to look at the best right to buy mortgage deals,  the lenders base their loans on two figures. The first is the OMV or open market value. This is the value of the property if it were sold on the open market. The second figure is the RTB or right to buy price, which is the discounted price that you are eligible for as a council tenant on the property.

Most mortgage lenders who provide mortgages for the right to buy market will lend up to 95% or even 100% of the RTB, but when calculating your loan to value for the mortgage will use the OMV. So for example if the OMV of the property is £150,000 , but the RTB ( discounted price ) is £125,000, then the lender will only lend 75% to 80% on a loan to value basis, i.e. £120,000 at 80% LTV, so in this case you would need to find the deposit of £5,000. Some lenders will go as high as 85% of the OMV, so it is worth shopping around for the best mortgage deals.

Before approaching any mortgage lenders I would urge you to discuss your own situation with your local authority so that you understand the opportunities available, but also the risks involved. Remember when purchasing a property there are many other associated costs including legal fees, stamp duty, insurance and ongoing maintenance. However, provided you meet the criteria and also have a good credit history this provides an excellent buying opportunity as in most cases you will not require a deposit due to the discount provided by the local authority.

Now finally let's look at a how to protect yourself with insurance, once you have found one of the best mortgage deals!

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