Right to buy mortgages...

Buying a property with a right to buy mortgage

A number of UK mortgage lenders offer specialist right to buy mortgages. The Right to Buy scheme - which offers council tenants the opportunity to buy the property they live in at a discounted price - has seen massive demand since it was first introduced in 1980. This scheme enables most secure local authority tenants with at least two - or five - years tenancy (depending when they moved in) to buy their homes at a discount price. The discount increases roughly in proportion to the number of years the tenant has been paying rent and several lenders offer specialist right to buy mortgages, to pay for it.

Can I get a right to buy mortgage if I've got debts or bad credit?

Most lenders do offer right to buy mortgages, even if you have existing debt and some will offer you a right to buy mortgage even if you have adverse credit. Standard lending criteria will apply, in relation to income and property value.

Buying property with a right to buy mortgage under the Right to Buy scheme could be highly profitable, not least because the property can be sold after three years, with the difference between the sale price and the outstanding mortgage going into the buyer's pocket.

The facts about right to buy mortgages

Lender criteria can be quite complicated in relation to right to buy mortgages, and you should ensure that all the facts are made clear to you before you go ahead. If you are considering exercising your rights under this scheme, it is likely that you are a first time buyer, and it is therefore essential that you obtain as much impartial mortgage advice as possible before you take what is a very important financial step.

But I've heard that the Right to Buy scheme is being phased out.

No. There have been rumours that the Government is planning to end the Right to Buy scheme. However, the Office of the Deputy Prime Minister - which deals with housing policy - has made it clear that it has no intention of ending the Right to Buy scheme.

Before you consider a right to buy mortgage though, you should check whether your local authority has imposed any restrictions on the Right to Buy scheme. Recently, Right to Buy has been restricted in some areas where the local authority has concerns about high house prices and levels of homelessness - mostly in London and the South-East of England. At the last count, more than 40 local authorities had restrictions in place - which effectively make Right to Buy less affordable, i.e. by reducing the discount available.

The Office of the Deputy Prime Minister has a section on the Right to Buy scheme which includes factsheets and booklets for tenants considering RTB.

Should I go ahead with a right to buy mortgage?