Right to Buy Mortgages > Mortgages and other Right to Buy Mortgage Costs

Mortgages and other Right to Buy Mortgage Costs

Like any normal property purchase, you will need to borrow money through a mortgage, unless you are in position to buy your home with cash.

To work out the amount of finance required to secure your purchase, you will need to deduct your right to buy discount and any money you have saved for this purpose from the valuation of your property, which will be provided by your current landlord.

There are a number of mortgage lenders that lend on right to buy properties. Most of these lend up to 95% or 100% of the discounted price of the property (RTB Price) and use the Open Market Valuation (OMV) to calculate your loan to value.

Some right to buy mortgage lenders work on the OMV instead of the RTB Price and allow customers to borrow up to 85% of the OMV.

Remember, once you have taken out a mortgage you will liable for the monthly payments, even if you become unemployed or are unable to work because of an illness or injury. Failure to keep up with repayments could result in you losing your home, and because you are no longer a tenant, you will not be able to rely on the council finding you another place to live.

Rent to Mortgage Scheme

If your right to buy mortgage application is unsuccessful, for whatever reason, you may still be able to purchase part of the property through a scheme known as the Rent to Mortgage Scheme. This allows tenants to buy a share of their council home and to pay a mortgage on that share. The remaining share is retained by the landlord, who receives rent from the tenant.

Other costs to consider

In addition to your monthly mortgage payments, you will also need to consider the other costs associated with the Right to Buy Scheme. These include council tax and water bills, which would have previously been paid as part of your rent, and buildings insurance, which covers potential damage to the structure of a property. Contents insurance is also highly recommended, although it is something you should already have in place as a tenant.

If your property is a flat, you will most likely have to also pay an annual service charge towards the maintenance of the whole building and repairs.

It is also worth bearing in mind that buying your home through the Right to Buy Scheme will affect your benefits. As a tenant you may have been eligible for housing benefit to help pay the rent. However, once you become a property owner this benefit will no longer be available to help cover the cost of mortgage payments.