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Getting a Right To Buy Mortgage to Buy Your Council House

Getting a mortgage on your council house? Find the right advice on the Right to Buy scheme here.

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  • Getting a Right To Buy Mortgage to Buy Your Council House

We get countless enquiries from council property tenants who are hoping to purchase their home through a Right to Buy (RTB) mortgage.

Although buying through this government scheme can be very attractive, it’s important to seek specialist advice before going ahead with any house purchase, so read on to find out more about the housing initiative or better yet, make an enquiry to speak with an expert on this topic.

Our comprehensive guide to Right to Buy mortgages in the UK covers the following topics…

Right to Buy mortgages explained: What are they and how do they work?

The Right to Buy is a government mortgage scheme which enables council tenants in England to buy their home, sometimes at a significant discount, and even without a deposit as many providers allow borrowers to put their discount towards the purchase price.

The mortgage itself will be subject to the usual affordability and eligibility checks and the discount you will receive can vary based on factors including the property type (i.e. whether it’s a house or a flat) as well as its location and value at the time of the application. If you’re hoping to obtain a mortgage for your council house, get in touch and the advisors we work with will determine whether you’re eligible for the Right to Buy scheme and connect you to the best RTB lender based on your needs and circumstances.

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Can I get a Right to Buy mortgage?

They are available to anyone who lives in a council house if they meet the eligibility criteria for a Right to Buy mortgage, which we’ve outlined below…

  • The property is their only or main residence
  • It is self-contained (the occupant doesn’t share facilities such as bathrooms and kitchens with other people outside of their household)
  • They are a secure resident (i.e. there is a legal contract between them and a landlord)
  • They’ve had a public sector landlord for three years (not necessarily 3 years running)
  • They are based in England (Wales and Northern Ireland have separate schemes and the Scottish equivalent of Right to Buy has now been abolished)

What else impacts my eligibility for council house mortgages?

Being able to fund the purchase, is also essential (of course!). Although getting a Right to Buy mortgage for a council house is a case of meeting the criteria in the section above, the lender will also want you to meet their affordability and eligibility requirements, so factors including your income and credit rating may be relevant.

Provided you’re eligible, you will be offered a mortgage based on x4.5, x5 or sometimes even up to x6 your salary, in the right circumstances, before the RTB discount is applied, and a specialist lender may be required if any of the following applies to you…

  • You have bad credit: Specialist lenders may consider your application based on the age and severity of the credit issue. For instance, it may be possible to get a Right to Buy mortgage with debt consolidation on your file if the issue is several years old.
  • You are retired: Some lenders have a Right to Buy age limit of 75, but others go up to 85 and a minority lend to borrowers even older than this, as long as they are confident they can keep on top of their payments during retirement
  • You are self-employed: A specialist lender may be more flexible if your income is non-standard, offering you a deal which takes regular overtime, bonuses and commission into account, for instance. Some mainstream lenders offer less favourable rates to self-employed borrowers or turn them away altogether.
  • The property has ‘non-standard’ construction: Some of England’s unique council properties (a small minority of this type of housing stock) may have elements of non-standard construction such as thatched roofs and timber frames. A specialist lender may offer you more favourable rates as some providers consider non-standard construction properties higher risk.

If you’re after a mortgage to buy a council house and are concerned you might be turned away because any of the above applies to you, get in touch and the advisors we work with will connect you with the provider best positioned to offer you an attractive deal.

How much Right to Buy discount can I get?

Mortgages for Right to Buy-eligible customers can come with varying levels of discount and the amount you will receive can depend on the following factors…

How long you’ve lived in the property for

If you’re buying a council house via a Right to Buy mortgage and have lived in it for 3-5 years, you will be eligible for a 35% discount on its market value. After five years, the discount will increase by 1% for every extra year you’ve been a public sector resident.

The table below illustrates how much discount you would be entitled to when buying a house with a value of £100,000…

House with a 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

Whether you’re buying a house or a flat

If you’re getting a mortgage for a council flat through Right to Buy, the discount you will qualify for will be different. If you’ve been a public sector resident in this type of property for 3-5 years, the discount will be 50%. After five years, it will increase by 2% each extra year.

The table below illustrates how much discount you would be entitled to when buying a flat with a value of £100,000…

Flat with a 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

£40,0000

The value of your home

The maximum discount Right to Buy borrowers are eligible for in most of England is £80,900 (£108,000 in London), so for houses and flats of a certain value, the discount is capped. This is also the case for anyone who has lived in their property for a specific amount of time.

Whether your landlord has spent any money on the property

If your landlord has invested any money into your council property, the discount you’re eligible for will likely be affected. Moreover, if the amount they’ve spent on maintenance or home improvements exceeds the property’s value, you won’t be entitled to any discount.

How to calculate your Right to Buy discount

If you’re planning to buy a council house with a Right to Buy mortgage, you can work out how much discount you will be eligible for with the official Right to Buy calculator. However, the advisors we work with can do this for you and connect you with the best lender for someone with your needs and circumstances if you make an enquiry.

How do I go about getting a mortgage to buy my council house with Right to Buy?

Customers often ask us how do I get a mortgage to buy my council house with Right to Buy?” The first step of the application is filling out an RTB1 application form, which can be found on the scheme’s official website here.

If you’re unsure about anything on this document, or any other aspect of the application process, get in touch. The advisors we work with can walk you through it and connect you with the right lender.

Seeking advice from a broker with access to the entire market is the best way to kickstart your Right to Buy application. Not only can they talk you through the process and work out how much discount you qualify for, they can also connect you with the lender best positioned to offer you favourable rates based on your needs and circumstances.

Do I need a Right to Buy mortgage broker?

Speaking to one is certainly recommended if you’re hoping to secure a mortgage through the Right to Buy scheme.

Getting a Right to Buy mortgage with the best rates is a case of meeting the eligibility requirements at as many lenders as possible, so it’s vital that you seek out a broker with access to the entire market to find the provider best positioned to offer you a good deal.

The advisors we work with are whole-of-market and can offer you the right advice and connect you with the right lender based on your needs and circumstances.

What to look for in a Right to Buy mortgage broker

A RTB mortgage broker should find you the best lenders based on your circumstances and preferences. They should be understanding, non-judgmental and offer confidential advice through every step of your Right to Buy application.

In order to do this it’s, of course, important they specialise in Right to Buy applications, as well as various other areas, such as:

  • Self-employment
  • Income from various sources (bonus / overtime / allowances etc)
  • Adverse credit
  • Non-standard construction property
  • Maximising income and affordability

If you fall into any of the above niche categories, it’s essential to seek out a whole-of-market expert before proceeding as a mainstream lender might turn you away of offer unfavourable rates. Make an enquiry and we’ll refer you to a Right to Buy mortgage advisor that best suits your situation.

How can a Right to Buy broker help me?

The Right to Buy process can be daunting if you’ve never applied for a mortgage before or are unsure about how Right to Buy works. Getting help from an advisor can take the pressure off and make the process a lot less stressful.

Here’s how a Right to Buy mortgage broker can assist you through each step of Right to Buy.

Working out the costs

A Right to Buy mortgage broker can look through your finances with you and help you work out if you can afford to not only buy the property but maintain it through the years and also keep up with other bills and costs you’ll have too.

These can include:

  • Repair and maintenance costs
  • Mortgage payment protection insurance
  • Building, contents and life insurance
  • Service charges if you bought a leasehold property (usually flats and some new builds)

Making an application

If you need more help filling in your RTB1 application form, a Right to Buy advisor can help you and make sure it’s sent to the right council department or your landlord.

Making sure your council / landlord responds in good time

Your landlord should respond to your application within 4 weeks to confirm whether you have the right to buy your home. If your landlord misses this deadline, your Right to Buy mortgage advisor can chase your application. If your landlord or council miss the deadline, you could get a further reduction on the sale price.

Appealing your offer

The council / landlord will send you an offer notice which will give you a valuation of the property, any details of any structural issues and information about how much discount you will receive. You might feel that your property has been overvalued or that you are eligible for more discount. Your broker can help you make an appeal and make sure that you receive a fair offer with the correct discount.

Finding the best mortgage for you

Researching mortgages and finding lenders that will approve you can be really time-consuming and often disheartening, especially if you’ve had bad credit or are applying alone or as a self-employed applicant. Some high street lenders and banks can view things like this as “red flags” and will offer higher interest rates or even reject the applicant.

A Right to Buy advisor will have in-depth knowledge about which lenders will be likely to accept you as well as which ones have lower interest rates and more affordable terms.

Purchasing your home

Once your Right to Buy advisor has found you the best mortgage based on your circumstances, they will guide you through the process of applying and then buying your home as well as work out how much discount you’re entitled to. Note that a good mortgage specialist should always make things clear to you and gain your agreement before proceeding with any actual applications.

Right to Buy mortgage FAQ

Here, you will find the answers to the questions we most frequently hear about getting a mortgage for a council house with Right to Buy in 2019.

Can you get a council house if your name is already on a mortgage?

You wouldn’t be able to buy a council house via Right to Buy if your name is already on a mortgage, as the scheme is exclusively for properties that are your main and only home. However, you would be free to apply for a mortgage on a second home after you’ve purchased a council house through the RTB scheme and the lender is unlikely to treat your application any differently to any other second-home customer.

Get in touch and the advisors we work with will outline all of your options for second home purchases and connect you with the right lender.

How easy is it to get a Right to Buy mortgage?

Getting a mortgage on a council house can be  easier through the Right to Buy scheme when compared to buying properties on the open market, as the discounts on offer make them more affordable, and in some cases, enable to the borrower to take them out without a deposit (i.e. the discount goes towards the purchase price).

Whether a Right to Buy mortgage is ‘difficult’ to get can vary from lender to lender and will depend on how closely the borrower meets their eligibility requirements. See the ‘Can I get a Right to Buy mortgage?’ section for more information about this.

Can I get an interest-only mortgage through the scheme?

In theory, it may be possible but interest-only Right to Buy mortgages are rare. Most providers, especially high street lenders, only offer interest-only residential home loans to borrowers who have a viable repayment vehicle – i.e. a plan to repay the loan amount at the end of the term, such as an investment portfolio or a pension payout.

These deals can also come with relatively high income requirements as some lenders will only entertain the notion of a residential interest only mortgage if the borrower earns at least £50,000 per year.

Can I get a RTB mortgage with low income?

Yes, it’s theoretically possible since there are savings to be made through the Right to Buy scheme, and with large discounts come lower loan amounts that make the property more affordable for many. As previously mentioned, the maximum discount is £80,900 outside of London and £108,000 in the capital. With this discount in place, it buying a council house with a mortgage product geared towards low-income borrowers is certainly within reason.

Whether you’re using Right to Buy or not, if you’re income is limited, it’s always advisable to seek whole-of-market advice to ensure you end up on the best deal. The specialist lenders they can connect you with are more likely allow you to use things such as disability benefits (or any other type of supplemental income you may be entitled to as a low-income earner) as declarable capital for your Right to Buy mortgage.

Can I get a joint mortgage?

Yes! But the person you’re buying with needs to have been living with you for the last 12 months or be a joint occupant with you at the council property.

Can I get a buy to let mortgage?

You can’t get a Right to Buy mortgage for a buy to let property initially, but five years after taking out the residential home loan, it may be possible to remortgage onto a buy to let agreement, providing you won’t be living in the property yourself, although you will also need to contact your landlord and obtain their consent as well.

The BTL mortgage application will be subject to the lender’s usual criteria for these products. Consult our dedicated page on buy to let mortgages or make an enquiry for further information.

I’ve never owned a property before. Can I use the Right to Buy scheme?

Yes, being a first-timer is unlikely to affect your chances of landing a Right to Buy mortgage, providing you meet the standard eligibility and affordability criteria.

RTB mortgages, in many ways, are ideal for first-time homeowners since the discounts on offer can make them more accessible than other products, but seeking specialist advice from an expert broker is recommended for those with little or no experience in property.

When can I sell my Right to Buy property?

Right to Buy mortgages can help you buy your council house at a discounted rate but we often hear from customers who want to know when they can sell the property on.

You can sell a Right to Buy property at any point, but if it’s within five years, you will have to pay back all or some of the discount (depending on the local authority and location). If it’s being sold within 10 years, the local authority must be given first refusal on it, and it can only be sold on the open market if they decline.

Do I need a deposit?

Not always. Some lenders will allow you to use your Right to Buy discount as a mortgage deposit but keep in mind that this doesn’t apply to all providers.

What if I want to borrow more?

This will depend on whether your home is still in the pre-emption period, during which the council still holds a legal charge on the property. This could prevent you from remortgaging for additional borrowing with some lenders, although other providers with a higher appetite for risk might consider a Right to Buy remortgage application from a customer who’s still in a pre-emption period.

Taking out a secured loan may also be an option for anyone who needs to borrow more, though you should keep in mind that lenders who offer these products to Right to Buy customers usually deduct the outstanding discount from the applicant’s income before applying their debt-to-income ratio.

How long does the Right to Buy process take?

If your landlord agrees that you have the right to purchase your council house, they must put this in writing within eight weeks of telling you (12 weeks for a leasehold property). The Right to Buy process itself takes between nine and 12 months to complete, on average.

Speak to an expert Right to Buy mortgage broker

If you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Right To Buy Mortgage Information

Looking for specialist advice? Read through our articles about Right to Buy situations and how best to prepare yourself to find the right mortgage for you.

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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