Right to Buy Mortgages

Under current government legislation (The 1981 Housing Act) council, housing association and housing trust tenants in the UK have the right to buy their homes. This can be a good starting point for first time buyers as homes are often available at generous discounts providing a valuable first foot hold into the property market.

House prices are currently so high in Britain many young people and first time buyers have been left behind and been subsequently frozen out of the property market altogether, this often can be one of the only feasible ways to get onto the property ladder.

After a tenant has lived in the property for a preliminary period (normally 2 years) the tenant then has the right to purchase the property often at a discounted rate. The price you are entitled to buy the property for is dependant upon the type of property and how long you have resided in it. Under the right-to-buy scheme, council tenants are entitled to a 32% discount on the value of their house after they have lived in it for two years, followed by a further 1% deduction for each additional year, up to a maximum of 60%. For flats the available discount rises to 70%. In addition to the discounts on the property discounts on loans and mortgages may also be available depending on your status and eligibility. Surprisingly some mortgage schemes can offer such favourable rates that mortgage repayments are often cheaper then tenants current rent payments so buying your council property could favour you dramatically short and long term.

Mortgages for this kind of property purchase are offered by specialist companies and vary quite dramatically to conventional type mortgages. The mortgages are usually offered for the market value of the home rather than the discounted rate that you purchase it for. For instance if you have lived in the property for ten years and purchase it with a 40% discount you will still be eligible for a mortgage of up to 70% of the properties true market value leaving you with surplus cash.

The right to buy scheme has been designed with mortgages working in this manner so that surplus cash can be mainly used for home improvements and renovations to your property. This means the potential for increasing the value of your home by making home improvements is far greater than when you were a tenant of your local council or housing authority when often houses were rarely if ever renovated or given home improvements.

If you can't or simply choose not to buy a house privately and you are eligible to have the right to buy your residence through this or similar schemes, you should seriously consider this option. It will however be advisable to seek sound professional advice before considering any purchase or mortgage arrangements.

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