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A Guide to Right to Buy Mortgages

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 26, 2021

Although buying a council house through the Right to Buy (RTB) can be very attractive, it’s important to seek specialist advice before going ahead with any house purchase.

To help you out, we’ve put together this guide to Right to Buy mortgages. It includes everything from information about the government scheme itself, the criteria for it and guidance on finding a mortgage broker who specialises in RTB deals.

What is a Right to Buy mortgage 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 criteria 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. 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.

Can I get a Right to Buy mortgage?

They are available to anyone who lives in a council house if they meet the 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)

Eligibility criteria

Being able to fund the purchase is obviously essential. 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 mortgage application even with bad credit, depending on the age and severity of the credit issue. For instance, you might be able to get a Right to Buy mortgage with debt consolidation on your file if the issue is several years old.
  • You are retired: Some mortgage 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, as well as 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 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 to get a Right to Buy mortgage

Here are three easy steps to help you get started…

  • Fill out an RTB1 application form: This is a document you’ll need to complete to apply through the scheme. You can find a digital version of it on the RTB website.
  • Prepare your mortgage documents: You can find a complete list of the documents you’ll need in our guide to mortgage applications. You should also download your credit reports to challenge any inaccuracies and have outdated information removed.
  • Speak to a mortgage broker: Seeking advice from a broker who specialises in Right to Buy mortgages is the best way to start your 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.

Make an enquiry and we’ll match you with a specialist broker so you can get started.

How much discount you could 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 property 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 £40,000

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 properties 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.

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Why you should use a Right to Buy mortgage broker

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.

Get matched with a Right to Buy expert today

We offer a free broker-matching service that can pair you up with a Right to Buy expert based on a quick assessment of your needs and circumstances. This will ensure you’re introduced to the broker who’s best place to help you get a RTB mortgage.

Call 0808 189 2301 or make an enquiry and we’ll set up a free, no-obligation chat between you and your ideal mortgage broker today.

FAQs

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.

Can you remortgage a Right to Buy property?

Yes. You can remortgage a property you bought through the Right to Buy scheme at any time, but you must speak to your local authority and seek professional advice first, especially if you’re refinancing to borrow more money.

See our complete guide to remortgages for more information.

Can I borrow more money?

Yes. But, as stated above, it isn’t just your mortgage lender who will need to sign off on this when you apply for a remortgage. You will also need to contact your local authority and seek their permission to refinance for the purpose of additional borrowing.

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 affordability and eligibility requirements.

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

In theory, yes, 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 your income is limited, it’s always advisable to seek whole-of-market advice to ensure you end up on the best deal. The specialist providers 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 declarable capital for your Right to Buy mortgage.

Can I get a joint mortgage?

Yes, it may be possible to get a joint mortgage! 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, you could 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.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the 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 information 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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