Pete Mugleston | Mortgage AdvisorPete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.
Updated: 17th April 2019* | Published: 27th February 2019
If you’re looking to get a mortgage for a property under the Right to Buy scheme (RTB), you’ve probably spent some time thinking about what sort of deal you’re eligible for and the amount of deposit you’ll be required to pay.
We frequently get asked about Right to Buy mortgages and deposit amounts, so we’ve put together this article to answer all of your burning questions.
Here is everything you need to know about obtaining a RTB mortgage, along with the costs and discounts that potential homeowners can benefit from.
We understand that it can be harder in certain circumstances to find a Right To Buy mortgage deposit for your council property, but the good news is we work with specialist advisors who have helped hundreds of customers who are now homeowners.
Make an enquiry now and we’ll have one of the right to buy specialists give you the right advice!
What is Right To Buy?
The Right to Buy scheme is specifically available to tenants in England who are looking to purchase their council home. It’s backed by the government and gives an opportunity to credit-savvy individuals who want to get their feet on the property ladder. This scheme offers huge financial discounts to council tenants, and this now means that there is movement in how much deposit is payable.
Do you need a deposit for Right to Buy mortgage?
No, not usually. All lenders have different underwriting policy when it comes to how much deposit for a right to buy mortgage is required - Some lenders want a tenant to contribute a cash deposit (say 5-10%) regardless of discounts applied, their background or credit status. Thankfully, many offer right to buy mortgages with no personal deposit required whatsoever.
How do you get a right to buy mortgage with no deposit?
The lenders that offer buyers the chance to get a Right To Buy mortgage with no deposit, do so simply by allowing the applied discount to count towards the RTB deposit instead. This offers up a massive opportunity for those on low incomes or customers who don’t have excessive savings, which we’ll discuss further in this article.
Can I get the right to buy as a housing association tenant?
It’s important to note that this scheme is only available to tenants of council properties who are looking to buy from their landlord; this scheme DOES NOT apply to tenants of housing associations.
There is another specific scheme for these tenants called the Right to Acquire. If you’re interested in the particulars of a Right To Acquire mortgage deposit, contact us and we can help you find a lender today.
Very important point: you’re not allowed to use your residential Right To Buy mortgage for a property that is intended for Buy to Let purposes. This is not allowed under the terms of the scheme. If you get a mortgage under the scheme and then decide to sell within the first five years, you are very likely going to be asked to repay all, or the majority, of your discount.
Do all lenders offer right to buy mortgages?
Not all lenders offer mortgages for the RTB scheme and unfortunately, if you fit the following criteria, getting a Right to Buy mortgage can be a harder task:
If you have a bad credit history
If you are self-employed or have a different income type
If the property you are buying is a bit different or it’s a property of non-standard construction.
Can I get a right to buy mortgage if I have bad credit?
Bad credit when applying for a council right to buy mortgage isn’t the end of the world, but it can make it a little more difficult. Below is a list of potential credit issues you may be faced with as a borrower if you’ve ever experienced any of these:
Adverse credit overview
Low credit score
County Court Judgements (CCJs)
Individual Voluntary Arrangements (IVAs)
Debt Management Plans (DMPs)
Even if you’ve had bad credit in the past, we work with advisors who are specialists in handling application from people with bad credit, even a bankruptcy may not stop you getting a right to buy council house, but you do need a deposit.
Can I get a right to buy mortgage for a non-standard property?
A property of non-standard construction is any property that does not conform to a standard type of construction i.e. the property is:
Made from a steel frame
A building with a wooden frame
Made of concrete (whether a house or a bungalow)
Not made of brick or block walls
A high-rise apartment or flat in a tower block
A high-rise flat with balcony access
Because these properties are outside the standard construction type, generic lenders might refuse the customer a mortgage based on the property being ‘defective’ and outside the norm.
These properties may need repairs or alterations before they can be called ’mortgageable’.
For high-rise properties, brokers have their own individual underwriting that will determine whether a mortgage is offered or not. Problems tend to start where the building is more than 7 or 10 stories high.
The really good news is that if you don’t fit into one of the above categories, then getting a Right to Buy no deposit mortgage could easily be a reality for you.
Can I use the Right To Buy mortgage discount as deposit?
Customers searching for RTB mortgage lenders requiring no deposit have probably asked themselves the seemingly obvious: ‘Can I use the right to buy discount as a deposit for my property?’
This question entirely depends on your specific lender so it’s a really good idea to use a mortgage advisor who can tailor your search to find you the best deal.
Some lenders might be happy to offer customers a 100% mortgage and accept the Right To Buy discount as deposit on the property. This means that homebuyers could get their Right To Buy council house deposit from the discount applied to the property as long as they fit the criteria of their specific lender.
For example, if you’ve been a council tenant in the North East for 5 years and the property is worth £250,000, your Right To Buy discount percentage could be £80,900 or 35%. The discounted purchase price of the property would be £169,100.
Can I get a right to buy mortgage with no deposit?
If you find a lender who is willing to accept the discount as a deposit, this would mean that the tenant would only have to cover the legal fees instead of investing their own cash deposit into the scheme. Many ex-council tenants have their Right to Buy discount used as deposit for their properties and as long as your lender is willing, the process is fairly simple.
Searching for Right To Buy mortgage lenders no deposit needed and not getting any closer to purchasing your home? If the brokers you’ve approached have led to dead ends so far, it doesn’t have to be the end of the road.
Finding a broker to offer a Right To Buy mortgage no deposit required deal might seem like the hardest task in the world but don’t panic. The advisors we work with can take the stress away from buying your property, offer the right advice and find you the best lender for your needs.
Can I borrow more than the purchase price?
If your council property will need renovations upon purchase, some mortgage lenders may allow you to borrow additional funds above the price of purchase specifically for home improvements.
A word of warning; the lender will likely check that the borrowed amount goes towards this purpose so make sure that the money is going to be invested in the right place.
Borrowing in addition to the purchase price will again be subject to your lender and your individual financial circumstances.
The experienced advisors we work with can even find potential homebuyers a no deposit Right To Buy mortgage from a lender that’s happy to allow additional borrowing above the purchase price AND extra cash to cover the legal fees.
These could include the purchase charges and broker fees which really does demonstrate how important it is to get the advice of in-the-know professionals to save you cash.
Talk to an advisor who’s an expert on Right to Buy deposits
If you like anything in this article or you’d like to know more, 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.
*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.
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 here...
Find out more about how we help people with low deposits.