Looking for a Right to Buy Mortgage?
Right to Buy Mortgages: Help and available solutions from Shire Direct...
Interested in buying your home at a discount from a local authority or housing association? Then a Right to Buy Mortgage from Shire Direct is for you! Right to Buy Mortgages enable council tenants and housing association tenants to buy their homes at a substantial discount, depending on the area they live in.
If you are currently a tenant with a local authority or housing association you may be entitled to buy your home at a substantial discount of up to £38,000, depending on the length of time you have been a tenant with the council or association, and depending on the area where you live.
So, here we'll take a look at Right to Buy mortgages and explore their advantages and disadvantages. We'll also look at how Shire Direct can help with a Right to Buy mortgage solution.
Right to Buy Mortgages - table of contents:
Right to Buy legislation...
The Right to Buy scheme was first introduced in the United Kingdom in 1980, although major changes were introduced into the Right to Buy legislation in 2005, which has imposed certain restrictions mainly affecting when and how much discount can be claimed, as well as the effects of potential repayment of discount that was received on future resale of the property.
Under the 2005 provisions, the Right to Buy scheme has imposed the following requirements and restrictions:
- Applicants must have been a tenant for a minimum period of five-years.
- The maximum amount of discount allowed has been reduced, and depending on where your property is situated, will range from £16,000 to a maximum of £38,000.
- If you sell the property during the first five years of purchase, an amount will become payable to the local authority or housing association and will be calculated as a percentage of the resale price.
- Under the new Right to Buy provisions, if you sell your property within ten years of purchase, the local authority or housing association has the right of first refusal to purchase in preference to any other purchaser.
For more comprehensive information on the Right to Buy scheme and its provisions, see the following pages from our Mortgage Glossary...
Advantages of Right to Buy mortgage funding
So, what are the benefits of buying my council property? Well, there's a myriad of reasons why buying your council home could be a prudent move, and many of the benefits may be glaringly obvious:
- It's a Gift!
The discount granted by the local authority (or housing association) is a substantial gift, although as we have seen above, there are strings attached!
- Deposits are not usually necessary
A deposit will generally not be required, as the discount you receive will usually be sufficient to act as your deposit.
- Get on the property ladder!
For those currently occupying Council property as tenants, the Right to Buy scheme is an excellent way to get on the property ladder.
- Raise additional funds
Additional amounts can often be raised over and above the discounted purchase price, and many of our mortgage lenders will advance up to 95% or even 100% of the market value of your property. This can be ideal if you are looking to carry out home improvements etc.
- Rent goes on forever - a mortgage can just seem like it does!
Talk to anyone that has taken out a mortgage recently, and they're likely to feel weighed down. However, have a chat to someone who arranged their mortgage twenty years ago or more, and the chances are they'll be quite smug as they have already repaid their mortgage, or are quite near to doing so!
Some claim that buying on a mortgage is cheaper than renting. You must be careful here, as there are many facets to be taken into account, such as the insurance and property maintenance costs. However, it is true that at some point you will repay your mortgage and have no further monthly mortgage commitments, whereas if you are a tenant, you will always have to pay a realistic rent payment.
- A substantial asset to pass on to your loved ones!
Another important aspect of owning a property rather than renting is that homeowners will have a valuable asset to pass on to their children or other beneficiaries, and of course the property is also a valuable asset that can be used as security if needed.
The possible disadvantages of Right to Buy mortgages
And the downsides then? Before rushing headlong into buying your council house, you should carefully consider the following aspects of homeownership:
- You're now responsible for the property repairs!
Up until the point of buying, the council (or housing association) are usually responsible for any basic property repairs and maintenance. Once you have bought the property and repairs are needed - you pick up the tab!
- Mortgage repayments will generally follow market trends
Rent payments will usually remain stable for at least a year, whereas mortgage rates can fluctuate several times in a year - and the changes might possibly all be upwards!
However, in real terms over the life of a standard mortgage of 25-years, monthly mortgage payments are likely to be much lower than the rental over time. Let's say that 25-years ago the average mortgage borrowings were £25,000 at a rate of 8%, the monthly repayment would be about £193, whereas the council rent charges at that time were say £30 per week (£130 per month).
If we compare this with an equivalent rental payment nowadays of say £90 per week (£390 a month) - rent is now three times higher than 25-years ago, and about twice the cost of the mortgage repayments - that is if the mortgage hasn't been repaid, when the monthly cost to the homeowner would be NIL!
Right to Buy mortgage help and solutions available from Shire Direct!
You'll be pleased to know that Shire Direct are able to provide Right to Buy mortgages. So what are the benefits of arranging my Right to Buy mortgage through Shire Direct you may well ask. You may well have noticed that throughout our website we underline the fact that buying your home is likely to be the largest financial transaction you'll ever enter into, and so it's extremely important that from the very outset you understand the implications of having a mortgage, and getting appropriate advice and a recommendation.
Shire Direct mortgage advisors are all professionally qualified, and are geared to carefully assess your circumstances, needs and aspirations, and coming up with just the right mortgage product for you. This is even more important, as you're not likely to have purchased a property before, and we'll help you through all the complexities involved in the home buying process.
Remember too, that as specialist mortgage intermediaries, Shire Direct are also able to arrange mortgages for all types of borrower - even in the trickiest of circumstances. Here are just a few examples of the benefits of arranging your Right to Buy Mortgage through Shire Direct...
Buying your home under the Right to Buy scheme is a great way to get on to the property ladder. If you are thinking about buying your council home, and would like to discuss your options with one of our qualified Mortgage Advisors, we'd love to hear from you - whatever your circumstances.
So if you are considering a Right to Buy mortgage, a quick call to one of our qualified Mortgage Advisors will soon put you in the picture. We are confident that you'll find our service to be friendly and helpful and not in the slightest bit stuffy! Our Freephone line 08000 282 281 is open until 10.00pm daily - including weekends, so why not call us now, we think you'll be glad that you did! Alternatively you may wish to enquire online at any time, we'd love to hear from you and we will be delighted to help in any way we can.
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
